Greetings, and welcome to The Home Depot third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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. Welcome to The Home Depot's third quarter 2023 earnings call. Joining us on our call today are Ted Decker, Chair, President, and CEO, Ann-Marie Campbell, Senior Executive Vice President, Billy Bastek, Executive Vice President of Merchandising, and Richard McPhail, Executive Vice President and Chief Financial Officer. Following our prepared remarks, the call will be open for questions. Questions will be limited to analysts and investors, and as a reminder, please limit yourself to one question with one follow-up. If we are unable to get to your question during the call, please call our Investor Relations Department at 770-384-2387. Before I turn the call over to Ted, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations will also include certain non-GAAP measures. Reconciliation of these measures is provided on our website. Now, let me turn the call over to Ted. Thank you, Isabel, and good morning, everyone. Sales for the third quarter were $37.7 billion, down 3% from the same period last year. Comp sales declined 3.1% from the same period last year, and our U.S. stores had negative comps of 3.5%. Diluted earnings per share were $3.81 in the third quarter, compared to $4.24 in the third quarter last year. The third quarter was in line with our expectations. Similar to the second quarter, we saw continued customer engagement with smaller projects and experienced pressure in certain big-ticket discretionary categories. In addition, lumber and copper and wire deflation and storm-related overlaps negatively impacted results in the quarter. Billy will discuss these and other business trends shortly. During the third quarter, our pro customer outperformed our DIY customer. While internal and external surveys suggest that pro backlogs are lower than they were a year ago, they are still healthy and elevated relative to historical norms. With only one quarter left in the year, we believe the endpoints for our previous guidance range are no longer likely outcomes. As a result, and as we announced in this morning's press release, we narrowed our guidance range for fiscal 2023. Richard will take you through the details in a moment. As we've discussed, this year reflects a period of moderation. However, we are confident in our ability to navigate through this unique environment. We remain very excited about our strategic initiatives and are committed to investing in the business to deliver the best interconnected shopping experience, capture wallet share with the pro, and grow our store footprint. As we discussed at the investor conference in June, we continue to invest and focus on creating a frictionless, interconnected shopping experience for our customers. We are pleased with the progress we are making. HomeDepot.com is one of the largest retail websites in the United States, and our digital app is one of the most highly rated in all of retail. And yet, we believe there's still opportunity to reduce pain points across the shopping journey. Our teams are identifying areas of improvement, like better communication throughout the shopping journey, an easier returns process, and the ability to seamlessly and intuitively make changes to an order once placed. For our pros, we're investing in a multitude of initiatives. We remain focused on building out our unique ecosystem of products and services. As a result, we are evolving our organizational structure and recently elevated Ann-Marie Campbell to Senior Executive Vice President, better aligning our outside sales and service business in the global stores organization. Pro is one of our biggest growth opportunities, and this organizational change will allow us to better serve them by leveraging our full ecosystem of expertise, product assortment, fulfillment, and operations. Our merchants, store MET teams, supplier partners, and supply chain teams did an outstanding job delivering value and service to our customers throughout the quarter, and I'd like to close by thanking them for their dedication and hard work. In addition, The Home Depot is proud to have tens of thousands of veterans, service members, and military spouses in orange aprons. Last week, we announced The Home Depot Foundation surpassed the goal of $500 million invested in veterans causes, and also increased the total commitment to $750 million by 2030. With that, I'd like to turn the call over to Ann. Thanks, Ted, and good morning, everyone. Let me start by saying that I'm very excited about my new role and the alignment it will create between the outside sales and services business and the global store organization. As you heard at our investor conference in June, capturing a greater share of the pros wallet is one of our largest growth opportunities. It represents roughly $475 billion in addressable market, and today, we have relatively little share. The beauty of The Home Depot is that we have unique competitive advantages, our convenient stores, our leading brands, our engaged associates, our expansive fulfillment options that are on maps and that can be leveraged for the benefit of our customers. And that's exactly what we aim to do. To do that, our new organizational structure will create stronger momentum with our teams to drive success with the Pro. Hector Padilla will focus on improving the experience for pros shopping for our stores. His 29-year tenure and knowledge of our store operations and new pro capabilities will be instrumental in achieving our goals. Chip Devine, our Head of Outside Sales, brings nearly 30 years of distribution experience. He will work on building out capabilities to better serve more complex product needs. Ultimately, we must focus on removing friction within our operations so our customers have a great experience every single time, no matter how they choose to shop with us, whether in the aisles of our stores, picking a product at the store, receiving product at their job site, with a sales associate, or digitally. We know that most of our pros use many of these capabilities across our ecosystem when shopping with us. For us, we are building trust and a partnership that lasts for decades and across generations. This means we have to work hard to deliver a great experience regardless of their point of interaction. As you know, we have identified additional growth opportunities with the Pro, which requires us to invest in new capabilities and functionalities across the business. Think about the initiative we are undertaking with the Complex Pro. This customer interacts differently. They are accustomed to interacting with their suppliers in a different way than our traditional business model. Pros working on complex projects want to reserve product, use trade credit, and have products delivered to their job site in a staged manner. While these capabilities exist in the market today, we are incorporating them in our full ecosystem to serve Pro customers in a way no one else can. I could not be more excited about the opportunity that lies ahead. For the in-store experience, over the last several years, we have talked about the importance of in-stock and ultimately on-shelf availability or OSA. Having the right products in stock, in the right quantity, and on the shelf available for purchase is critical, and we've implemented several initiatives to help us do this more effectively and efficiently. In the past, we've talked about GSR or Get Stores Right. GSR drives productivity by using our proprietary space allocation model, coupled with our tenured field merchandising teams, to determine which categories to invest in on a store-by-store basis. More recently, we have talked to you about our rollout of Sidekick and Computer Vision. Using machine learning technology, Computer Vision helps our associates quickly find depalletized products in the overhead, and Sidekick helps direct associates to key bays where OSA is low or out-of-stocks exist. Today, these tools have been deployed across all U.S. stores, and while it's early days, they have driven meaningful improvement in our on-shelf availability. The beauty of these initiatives is that they also drive productivity. They make it easier for associates to restock product, have a greater depth of high velocity product, and ensure we remain in stock with more product on the shelf and available for sale. As a result, we enable our associates to focus on the most important tasks and allocate more time to deliver a better shopping experience. These are just a few examples of the many different types of initiatives that can drive significant value for our customers, our associates, and our shareholders. Despite a challenging year, our amazing associates have remained engaged and ready to serve our customers, and I want to thank them for all they do. With that, let me turn the call over to Billy. Thank you, Ann, and good morning, everyone. I want to start by also thanking all of our associates and supplier partners for their ongoing commitment to serving our customers and communities. As you heard from Ted, during the third quarter, our sales were in line with our expectations. However, we did have some unfavorable impacts from core commodity deflation and storm-related overlaps. We saw a continuation of a trend that we have been observing throughout the year, with softness in certain big ticket, discretionary type purchases. Instead of engaging in larger projects, customers continued to take on smaller projects. Turning to our department comp performance for the third quarter, our building materials department posted a positive comp, and 7 of our remaining 13 merchandising departments posted comps above the company average, including plumbing, appliances, hardware, outdoor garden, millwork, tools, and paint. During the third quarter, our comp transactions decreased 2.7%, and comp average ticket decreased 0.3%. Excluding deflation from core commodities, we experienced comp average ticket growth, primarily driven by demand for new and innovative products. Deflation from core commodity categories negatively impacted our average ticket growth by approximately 60 basis points during the third quarter, driven by deflation in lumber and copper. During the third quarter, we continued to see a decline in lumber prices relative to a year ago. As an example, on average, framing lumber was approximately $420 per 1,000 board feet, compared to approximately $545 in the third quarter of 2022, representing a decrease of over 20%. Big ticket comp transactions, or those over $1,000, were down 5.2% compared to the third quarter of last year. We continue to see softer engagement in big ticket discretionary categories like flooring, countertops, and cabinets. However, we saw big ticket strength in pro heavy categories like roofing, insulation, and portable power. Turning to total company online sales, sales leveraging our digital platforms increased approximately 5% compared to the third quarter of last year. We continued to invest in the digital experience across our website and app and released a variety of enhancements in the third quarter. These range from simple improvements to help customers track orders, to more complex things like updating our search and recommendation algorithms. For those customers that transacted with us online during the third quarter, nearly half of our online orders were fulfilled through our stores. During the third quarter, we hosted our annual Labor Day Appliance and Halloween events and were pleased with the results. In appliances, we were encouraged with the customer's engagement during the event. In 2023 was another record sales year for our Halloween program, both in-store and online, as our customers continued to add to their collection with our unique and exclusive product assortment. As we turn our attention to the fourth quarter, we intend to continue this momentum with our annual holiday, Black Friday, and Gift Center events. In our Gift Center, we continue to lean into brands that matter most for our customers with our assortment of Milwaukee, Ryobi, Makita, DeWalt, RIDGID, Husky, and more. We will have something for everyone, whether it's our wide assortment of cordless Ryobi tools, DeWalt Atomic drill and impact kits, or our new Milwaukee M18 FORGE batteries. These new M18 FORGE batteries will be a game changer for our pro customer, providing the most powerful, fastest charging, and longest life of any battery on the Milwaukee M18 platform. This quarter, I'm also excited to announce the addition of WAGO to our powerhouse assortment of pro brands, including Milwaukee, USG, Custom Building Products, Leviton, and QEP, to name a few. It is these strategic vendor relationships that make us the product authority in home improvement, and the addition of WAGO will help extend our position. WAGO is one of the top requested, most innovative pro brands in the wire connector segment that features a releasable lever lock wire connector that speeds up installation and saves space in tight applications. We recently launched a number of SKUs in our stores, which are exclusive to The Home Depot from the national big box retail channel. Our merchandising organization remains focused on being our customer's advocate for value. This means continuing to provide a broad assortment of best-in-class products that are in stock and available for our customers when they need it. We will also continue to lean into products that simplify the project, saving our customers time and money. That's why I am so excited about the innovation we continue to bring to the market. With that said, I'd like to turn the call over to Richard. Thank you, Billy, and good morning, everyone. In the third quarter, total sales were $37.7 billion, a decrease of approximately $1.2 billion, or 3% from last year. During the third quarter, our total company comps were -3.1%, with comps of -2.1% in August, -3.4% in September, and -3.7% in October. Comps in the U.S. were -3.5% for the quarter, with comps of -2.5% in August, -3.8% in September, and -4.1% in October. In local currency, Mexico and Canada posted comps above the company average. It is important to note that adjusting for storm-related overlaps and some seasonal shift, monthly comps were relatively consistent across the quarter. In the third quarter, our gross margin was 33.8%, a decrease of approximately 20 basis points from the third quarter last year, which was in line with our expectations. During the third quarter, operating expense as a percent of sales increased approximately 120 basis points to 19.4% compared to the third quarter of 2022. Our operating expense performance during the third quarter reflects our previously executed compensation increases for hourly associates, as well as deleverage from our top line results.... Our operating margin for the third quarter was 14.3%, compared to 15.8% in the third quarter of 2022. Interest and other expense for the third quarter increased by approximately $30 million to $438 million. In the third quarter, our effective tax rate was 23.3%, down from 24.4% in the third quarter of fiscal 2022. Our diluted earnings per share for the third quarter were $3.81, a decrease of 10.1% compared to the third quarter of 2022. During the third quarter, we opened 7 new stores, bringing our total store count to 2,333. Retail selling square footage was approximately 242 million sq ft. At the end of the quarter, merchandise inventories were $22.8 billion, down $2.9 billion, or 11% compared to the third quarter of 2022, and inventory turns were 4.3 times flat to one year ago. Turning to capital allocation. After investing in our business and paying our dividend, it is our intent to return excess cash to shareholders in the form of share repurchases. During the quarter, we invested approximately $670 million back into our business in the form of capital expenditures. During the quarter, we paid approximately $2.1 billion in dividends to our shareholders, and we returned approximately $1.5 billion to shareholders in the form of share repurchases. Computed on the average of beginning and ending long-term debt and equity for the trailing twelve months, return on invested capital was approximately 38.7%, down from 43.3% in the third quarter of fiscal 2022. Now I will comment on our guidance for fiscal 2023. As you heard from Ted, with one quarter remaining in fiscal 2023, we no longer expect the endpoints of our previous guidance range as likely outcomes, and therefore, we are narrowing our guidance for 2023. We expect fiscal 2023 sales and comp sales to decline 3%-4%. We are targeting an operating margin 14.2%-14.1% for the year. Our effective tax rate is targeted at approximately 24.5%. We expect interest expense of approximately $1.8 billion, and we are anticipating a 9%-11% decline in diluted earnings per share compared to fiscal 2022. In addition, as you heard from Ann, we continue to focus on driving productivity in the business. We have taken a number of actions that will help us realize the previously announced $500 million in annualized cost savings in 2024 and are fully confident that we will deliver on this commitment. We also remain focused on meeting the needs of our customers with our leading product authority in home improvement, strong in-stock levels, and knowledgeable associates. We will continue to prudently invest to strengthen our competitive position and leverage our scale and low-cost position to outperform our market and deliver shareholder value. Thank you for your participation in today's call, and Christine, we are now ready for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question. Hey, good morning, everyone. In thinking about inflections and when we might see one, looking at the spread maybe between DIY and pro, is the story of this quarter that maybe DIY is stabilized, but the pro is getting a little bit worse? And then, if that's right, and feel free to correct if that's wrong, you know, would that mean that it could take a little longer then for the pro sort of normalizing to play out, and actually the overall comp could get a little worse before it gets better? Morning, Simeon. Thanks for the question. I would say pro and consumer, you know, it had the narrowest performance gap in some time, so they both performed reasonably well. You know, if you step back and look at the quarter, we feel really good about the third quarter, and we narrowed our comp guidance for the year because of that. And in fact, if you look at the performance of the business overall this year, if you look at the seasonality of Q1 and Q2, we're pretty smooth in that -3% comp through the first three quarters of this year, and that's normalized for weather and storms and commodity price deflation. And then our regional businesses are also pretty consistent. We've seen the least variability in regions, and as I said, the narrowest gap between pro and consumer. We had really good seasonal sell-through, and as prices have settled with abating deflation, we feel pretty good about that. Our operations are increasingly getting back to normal. The supply chain is operating very well. Our inventory positions are better, our in-stock rates are much better, as Ann took you through all the things we're doing in the store to improve on-shelf availability. Our value propositions, as Billy mentioned, are in great shape, and product innovation is better than it's ever been, and the wage investments are paying off. Our attrition is way down, and with that attrition being down, our associates have had more time in the store, their ability to serve customers has improved. So all of that really is what delivered that consistent comp throughout the year. But, you know, to answer your specific question, as we sit here feeling really good about the operations, the, you know, share shift of PCE from pre-COVID to today, you know, has not completely reverted, and we're still not exactly sure where, you know, that reverts to. The asset class for home improvement is worth $15-odd trillion more than it was pre-pandemic. And we know now that the Fed, it definitely has a higher for longer monetary posture, and that's gonna continue to pressure durable goods in financing or motivation for larger home improvement projects. So as we said, you know, we see great engagement in seasonal goods, engagement with smaller projects. It's that the larger projects are a bit down at the moment. So that's what we're watching. I mean, we're not obviously talking about 2024 today, but, you know, lots of good news in the operations of the business. Great news with still a very resilient customer. I mean, we just came off of 4.9% GDP in Q3, driven by the consumer. But as you know, we're, we're looking at it this year, this period of moderation, for home improvement spend, but couldn't feel better about, about the business and in our operations overall. Thanks for that. And then maybe the follow-up, you mentioned GDP. Given, you know, that home prices seem to be pretty sticky, even with pretty weak turnover and may not get any better, how should we... Should we think about GDP? Should we revert to GDP as maybe a better proxy for how the business could do? Simeon, this is Richard. You know, we have tried to take the most thoughtful approach possible in over the last few years of what the drivers of the business are, and those things that indicate to us, you know, how we have settled back out of the pandemic period, and that's why we focused on share of PCE. Like Ted said, we're not gonna talk about 2024 today. There is an underlying kind of layer of economic activity that supports the business. But as Ted pointed out, number one, we still haven't reverted all the way back to 2019 levels of PCE share, and the Fed stance of higher for longer has had and could have increasing pressure on the outlook for durables and housing-related spend. So like Ted said, that's what we're watching at the moment. We'll talk about 2024 when we get to our call next quarter. Thank you. Our next question comes from the line of Zach Fadem with Wells Fargo. Please proceed with your question. Hey, good morning. Richard, considering all the ins and outs of your cost base this year with, you know, wage investments, you've got the legal settlement in Q1, plus the cost saves next year, is it fair for us to assume your operating margins can expand in 2024? Or is there a certain level of comp that you will need to see to hold this 14%+ margin? Morning, Zach. Thanks for that question. You know, margin expansion is largely a function of top-line growth. There is a point there in the low positive comp digits where you see expense turn from deleverage to leverage. We're not gonna take on 2024 guidance today. What we have done is we have put in place measures and in fact, now have essentially completed actions that will provide us with a $500 million cost buffer heading into 2024, and so regardless of the outlook, that provides some buffer in margin. Got it. And then you mentioned that you would reinvest the legal settlement gain from Q1. So first of all, any color on what this reinvestment actually is or what it would look like? And then is it fair to say the investment will be largely in Q4, or was there part of that in Q3? We've had, we've had part of that, spent throughout the year. I think it is still a correct assumption that that favorability will be fully offset by the end of the year. And so I really point you to our guidance as the best, jumping off point for your modeling. Got it. Thanks for the time. Thanks, Zach. Our next question comes from the line of Scott Ciccarelli with Truist. Please proceed with your question. Good morning, everyone. So in some other retail verticals or a lot of other retail verticals, we're seeing a return to pre-COVID purchasing patterns, where you probably see more activity, purchasing activity on weekends and around holidays and events with, frankly, bigger lulls in between. So the questions are, one, are you seeing a similar general pattern? And two, assuming that is the case, are there ways for you guys to take advantage of that pattern from an operational standpoint to improve productivity? Thanks. Yeah, thanks for the, for the question, Scott. It's Billy. Listen, as it relates to, you know, different fluctuations in customer patterns and so forth, we haven't seen that, been very consistent throughout the quarter. And as Ted mentioned in his prepared remarks, really throughout the year, when you account for some of the weather and some of the bathtub effect we saw in the first half. So we haven't seen that. Listen, as it relates to promotional activity whatsoever, we have events in our stores that we love to execute and drive excitement for our customers, but from a promotional activity standpoint, it's really reverted back to pre-COVID times. It's, you know, our pricing has certainly, as Ted mentioned, settled over the last several months. The environment's certainly stabilized. So, you know, we operate in a very rational market and promotional environment. As I said, this has returned to kind of pre-pandemic times. We will always- Thank you. Scott, we will always focus on EDLP. I mean, we have events during, you know, certain seasons that they're a lot of fun. They're engaging for the associates, they're engaging for our customers. But day in and day out, 12 months a year, we strive to be an EDLP retailer with great values every day. Got it. Thanks. And then just a quick follow-up. On the big ticket, discretionary, is there any specific areas where you're actually seeing a positive inflection, or are they all still trending, called mid-single digit negative? No, we called out in my prepared remarks, categories like portable power and so forth, where we have seen great engagement. Candidly, you know, we're thrilled with the innovation that we continue to partner with our supplier base on, that we bring to the market. Where we continue to see innovation, we continue to see great engagement with both the Pro and the consumer. Got it. Thanks, guys. Our next question comes from the line of Chris Horvers with JP Morgan. Please proceed with your question. Thanks. Good morning, everybody. So a couple follow-ups to prior questions. My first one is: With the gross margin decline in the third quarter, can you talk a little bit about what drove that? You were lapping storm-related demand, and you had some commodity deflation, so I would've thought that those would be positive. So is that fair? And what were the offsets that drove it lower? Thanks for the question, Chris. You know, I'll go back to Billy's comments, and Ted mentioned this as well. I think the most important observation we've made is that the worst of the inflationary environment is behind us, and as a result, as Billy said, retail prices are settling in the market. Some prices are settling at levels higher than 2022, others are settling lower, but we're seeing some stabilization there that Billy can talk about. Specific to the quarter and gross margin, there are some timing differences as some prices settle ahead of anticipated product and transportation cost benefits that will come through as we turn through our inventory. But those are. I'd really sort of consider those timing. For the full year, our view on gross margin hasn't changed, and we expect to see slight pressure year-over-year. But, Billy, maybe just talk about kind of the, you know, the settling of prices. Yeah, I mean, as you mentioned, you know, the inflation environment seems to be behind us. Prices absolutely settled in, and again, I reiterate what I said, you know, work in a very rational market. And the other thing I'd add is this is no different than any other timeframe, frankly. We have a portfolio approach to how we take on, whether it's lumber deflation that we've talked a lot about throughout the year or other, you know, ins and outs as it relates to the P&L. So a very normalized environment, rational and really a stabilization that we've seen across the board as it relates to pricing. Got it. Got it, got it, got it. So that makes sense. And then on the variable cost side, you talked about a low single digit leverage point historically and the $500 million of cost savings next year. At the same time, you've had negative transactions for quite some time now. So can you talk about, you know, where we are in terms of how it becomes less variable over time, maybe in the context of, you know, the percentage of stores on minimum staffing levels? You know, if there is negative comps in 2024 or over the next six months, you know, is the flexibility that you get from the $500 million offset by the fact that you could be having still negative transactions and less flexibility? Chris, thanks for the question. There's a lot of kind of 2024 conjecture built into that answer. I'll tell you that. Right? So I think, when you're talking about changes in the nature of our labor model, the degree of change in transactions really isn't material enough to say that changes the nature of our labor model. Got it. Sounds good. Thanks very much. Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question. Good morning. Thank you so much for taking my question. You talked about the promotional environment discounting being very rational. If the cycle or the downturn for home improvement remains protracted and extended, under what conditions would you expect that discounting will be more intense than it was in 2019 across the industry? And if that were to be the case, would Home Depot choose to remain true to the everyday low price and the portfolio dynamic approach that it has, or would it look to protect market share and participate in some of that activity? Good morning, Michael. Yes, we will stay committed to EDLP and our promotional cadences, as we said earlier, you know, the Black Friday, you know, appliances and gift center and, you know, some spring events for you know, seasonal garden items to get traffic in stores. Those have been, you know, the playbook for years and years, right, Billy? Exactly. And we don't see us going away from that. In fact, we've stayed truer to reductions of promotions. When you think of categories like ceiling fans that I remember was constantly on and off, you know, 10% and 20% off paint, which was a promotional category where, you know, 5% and 10%, and then it went to 10% and 20%. We've backed off all of that. And on the margin, we'd prefer to be even less promotional than we are today. If you had a protracted downturn in the market, I mean, for sure we're gonna be competitive, and for sure, we are going to protect our share. But when you think of the nature of a large home improvement project, certainly one done by a pro, you know, the labor component is such a big piece of that job. I mean, just take paint, for example. You know, if you're painting your living room for, you know, $500, the paint in that job is gonna be less than $100, and it's your labor bill, either your opportunity cost as a consumer or the pro doing the job for you. So, you know, being super aggressive to take $10 off the $100 component of a $500 job, I don't think really moves the needle, and that's why our bias, our starting position would be, no, we wouldn't chase a lot of price in that dynamic. Got you. Very helpful. My follow-up question is, historically, Home Depot has underpromised and over-delivered in just about all facets. Is it realistic to think that you took the same approach when building this $500 million of net cost savings for next year, such that there could be upside to that number? Well, that cost number was really more a function of having built capacity to handle the explosion in our volume during COVID, and then the sort of other side of that hill, where we pulled capacity in many forms back. And so it was the right thing to do, regardless of the environment. It does happen to provide a buffer for our operating margin, as we move into 2024. Okay, thank you very much, and have a great holiday. You, too. Our next question comes from the line of Steven Zaccone with Citi. Please proceed with your question. Hey, good morning, everyone. Thanks for taking my question. Congrats, Ann, on the new role. I wanted to focus on the pro side of the business. So, the commentary about growing with the complex pro, in the past, there's been a focus on the flatbed distribution centers and the rollout on a regional basis. Is that still very much the strategy for the next couple of years? And as you zoom out and think about the opportunity with the complex pro, what are the top priorities within those next one to two years? Steven, thank you. Thank you so much for the kind words there. You know, Chip is in the room, and he has been intimately, you know, knowledgeable about that. And so I'm gonna throw it over to Chip, and he'll talk a little bit about some of the capabilities that we continue to leverage and some of the functionalities and capabilities that we'll continue to build. Yeah, thank you, Steven. We are gonna continue, certainly our march down to the expansion of our outside sales teams and continue to grow the complex Pro, as it was mentioned in the earlier remarks. The connectivity into the store is an important part of this asset build as well. Our pros shop in our stores every single day, and connecting that ecosystem to our flatbed delivery systems is, is part of that. So as we look and expand into different markets, as we move forward from where we currently are, we will continue to evaluate the best opportunity to expand those, distribution assets as well to support our growth in Pro. Okay, thanks. I wanted to revisit Simeon's question about inflection, because I know it's a challenging backdrop to predict. But I guess as you think about the business, what are the key building blocks to take the business from this period of moderation to a more stable market backdrop when you talked about low single digit market growth? You know, I'm curious if you could opine on, is it really the PCE shift? You know, is it rates? Just any help you provide would be helpful. Thank you. Yeah... You know, we're always looking at a balance between ticket and transactions. And, you know, what was interesting during the COVID period, we were. We had inflation, so we had AUR up, and we had ticket up, also driven by basket size. But the engagement was so high, you really didn't have elasticities. You had driving ticket and transactions, and that's what led to the 25% comp. As inflation is abated in primarily commodities and those prices have come down, you've seen, you know, a falloff in ticket, and you didn't get the elasticity, you know, initially that you'd expect, and that was because people were still powering through projects. Now it's a mix of, you know, what's the level of response from pricing versus pull forward versus, you know, the Fed stance and higher interest rates. So that's all the dynamic that it's muddying the traditional ticket and transaction dynamic. But what's healthy for us, you know, is a solid comp, you know, equally balanced between ticket and transactions. And that's what we'd be looking for. And now we've, as we've said, you know, prices have essentially leveled. Our ticket, you know, was down modestly, and if you take out commodity, our ticket would have been up for the quarter. And then, transactions, you know, we're still working through a bit of that PCE shift, pull forward, you know, whatever that dynamic might be. But, you know, we'd be looking for growth in each, in a nice balance going forward. Very helpful. Thanks, guys. Our next question comes from the line of Brian Nagel with Oppenheimer. Please proceed with your question. Hi, good morning. Thanks for taking my question. The question I have, I think Michael may have asked previously just about, you know, price actions, but I guess maybe to expand that a bit further. So we've been discussing now this trend and, you know, weakness in bigger tickets for a while. I mean, obviously a very unique demand backdrop. But again, from your perspective, you know, and particularly as you look towards 2024, are there levers that Home Depot could pull, you know, to potentially spur better demand within big ticket, you know, other than price? Well, the number one way that we're focused to drive demand is with the complex Pro. So it's that is our key strategy, and that's what we're focused on. It's a $200 billion space, as we've defined the 950 split evenly Pro and consumer. And of the 475, that's Pro, there's $200 billion that is, you know, larger pros, more complex spend, that we're building out the capabilities to serve that demand. And that, Brian, you know, is what we're, you know, very, very focused on. And think for years and years, that is gonna be a driver of our business as we take share in that sort of $200 billion white space. Yeah. Thanks, Ted. Got it. And then my second, my follow-up and much quicker. You know, we obviously, you, you narrowed your guidance for the balance of the year. We talked about trends in the fiscal third quarter, but any commentary on, on sales trends early here in fiscal Q4? Our performance in the first two weeks is on track to achieve our full year 2023 guidance. Very good. Well, I appreciate it. Congrats again. Thank you. Our next question comes from the line of Peter Benedict with Baird. Please proceed with your question. Oh, hey, guys, thank you for taking the question. Another one on average ticket here. So, pre-COVID, average ticket around $67. I think now it's kind of trending closer to $90, so up 35%. Richard, just wonder if you have any perspective on kind of the like for like SKU inflation component there versus the big ticket mix. It sounds like your like-for-like inflation is, seems to be stabilizing. I know there's innovation that can make things not like for like, but just curious, as you think about the big ticket exposure there, and what, what, what could potentially play out there, you know, how big of a deal is that? Thank you. Thanks for the question. I think there are a few answers to that. First of all, we have seen inflation abate and really kind of settle on a like for like basis across the portfolio. I think it's interesting, you see some, you know, we've seen different dynamics in big ticket over the years as we've had lumber inflation and deflation in particular, skewing those results in big ticket. But Billy, maybe you talk a little bit about trends there. Yeah, I mean, I'll just, you know, Ted, Ted's response back to Brian on, you know, you see categories like drywall, where we have capabilities, roofing, insulation, portable power, where we've added innovation. We continue to see great, both pro and consumer, reaction to just the innovation and things we're seeing. As it relates to big ticket, you know, obviously you've seen some deferral and so forth, as we talked about, certainly, you know, the pull forward is probably, you know, still playing a part in that as we continue to get further away from, you know, the pandemic. So we'll watch that closely. We don't see anything, you know, as I mentioned, stabilized pricing, a rational environment, and we don't see anything, you know, differing from what we've seen over the last, you know, multiple months now. Okay. Thanks for that, guys. And then I just, I guess, turning to maybe the leverage and the pace of buyback. I mean, if we stay in this environment of, let's call it, moderation in demand, how do you think about just maybe balancing your buyback approach, leverage? I mean, you're operating below the 2x. Is there anything that prevents you from kind of moving up to that 2x, or are you? You know, just kind of curious, your latest thoughts around those topics. Thank you. Thank you. You know, we've maintained a position very close to that 2x debt-to-EBITDA leverage ratio, and we intend to do so in the foreseeable future. We will also, you know, really maintain consistency with respect to capital allocation. We invest in the business first, we pay our dividend, and then, as we determine excess cash, we flow that to our shareholders in the form of repurchases. To your point, to date, we've repurchased $6.5 billion. There's really no change in our stance, and so I think that's the important takeaway there. Okay, thanks so much. Good luck. Our next question comes from the line of Michael Baker with D.A. Davidson. Please proceed with your question. Okay, thanks. Just thinking about the fourth quarter, if we take the midpoint of the implied guidance, it does suggest a little bit of a deceleration, yet, you know, it does seem like your business has been consistent. Is that just a function of... You know, am I reading too much into that, or do we expect a deceleration? And maybe a second part of that, as you said, Halloween was really strong. Historically, into your trim a tree or your holiday decorating business. I think it's like in 10 of the last 14 years, your fourth quarter comp has been better than the third quarter. Why should this year be different than that? Thanks. Thanks for the question. You know, we, we. The narrowing of the range is truly what it is. We saw the extreme points of that range become less likely, and so we felt it would be helpful, for our investors, for us to narrow that range. There has been an assumption all year, from the beginning of the year, that our guidance reflected a reversion of our share of PCE from the pandemic time period back to 2019 levels. Our prior guidance range assumed that that share would continue to revert throughout the year. We've seen that reversion gradually and steadily, and our current range still has that assumption built in for Q4. We're largely reverted, but not all the way back. So there is some, some notion of that in our guide. Okay. So sounds like it's, like you said, it's just a function of getting to the middle of the range. If I could ask one other question. You talked a little about storms and seasonality. I think a lot of retailers have said it, it's been a warm fall. How does that impact you? Do you need it to get cold and, you know, as we go through the fourth quarter to drive your business? How should we think about that? Thanks. It's been a little warmer, obviously, but, you know, not a big impact. We started to see where the weather is normalized. We started to see some of that fall cleanup and fall business really, really take off. You know, haven't seen obviously, you know, snow and so forth. So, you know, it's kind of right in line with what we'd say is a little more normalized year, where you see the weather act a little more fallish. You've seen, you know, the categories and businesses that you'd expect to trend up, trend in that positive direction. Appreciate it. Thanks for, thanks for taking the time. Thank you. Our next question comes from the line of Steven Forbes with Guggenheim. Please proceed with your question. Good morning. Ted, or maybe for Ann, just a follow-up on pro sales, really focusing on the Dallas market versus the chain average. Can you update us on how that market's performing? And then maybe just comment on any behavioral differences that you're noting between pro markets based on the maturity of your strategic initiatives focused on the complex pro. I mean, are you seeing and being able to analyze very like predictable behavioral changes? Yeah, I'll start off by just saying that, the capabilities and functionalities that Hector and Chip, you know, have been working on over the last several years, are certainly, you know, going to help us engineer a great deal of momentum and success with the pro. And, you know, Chip, you know, I'll throw it over to you again because of how intimately you are knowledgeable about that. But the pro ecosystem is what we're focused on now, and not the in-store side or not only the in-store side, but the complex pro. And as we build out these capabilities and we see the effectiveness of these capabilities, we're gonna continue to leverage those. And, Chip, you know, I'll throw it over to you to kind of give a little bit more details on Dallas. Yeah. Thanks, Ann. And Steven, yes, absolutely, where we've built capabilities inclusive of assets, distribution assets, and where we've expanded our sales force, we've seen meaningful impact and growth. Our outside sales team is the best performing cohort of all pros. So we're gonna continue, as I mentioned before, to invest in that and then add assets where necessary in the appropriate markets. Thank you. Maybe just a quick follow-up for Richard or Billy. All the ticket conversations here, any way to just sum up how the quarter for big ticket progressed relative to expectations? It sounds like it performed better than expected. You have sort of stabilization in multi-year, big ticket comp trends. I would imagine that wasn't the expectation, but any way to help us frame on how the quarter progressed for big ticket versus internal plan? Yeah, I think, you know, listen, it was largely how we planned it. We, you know, I called out, you know, some great interaction from our consumers as it relate to appliances. Having said that, we were in a better inventory position there, so we saw some tailwind from just our better inventory position as it relates to that. But it largely played out exactly how we had thought it would. And really, again, back to the prior comment, to a very balanced year across the board when you account for some of the weather shifts early on and then, you know, what we were lapping with the hurricane. Very balanced across the board and across the regions. I think it's important, though, thematically, just to sort of repeat the point. This stance by the Fed of higher for longer, you know, is sort of coming across in surveys. You know, there is a deferral of larger projects. And so if you just wanna zoom all the way back to the true macro here and the forces on ticket that we're watching, that's probably the largest macro force. That's right. Thank you. Christine, we have time for one more question. Thank you. Our final question comes from the line of Dean Rosen with Bernstein. Please proceed with your question. Hey, guys. Thanks so much for taking my call. My question is about the pro and really just understanding the performance of the pro relative to the comp overall, and then splitting that out between store sales to pro versus complex project sales to pro. So just to make sure I'm understanding, you put up a, you know, call it a -3 comp, DIY and pro, very close to one another, US slightly worse than Canada and Mexico. So I'm assuming, you know, US pro, call it down 2, 2.5. And then can you just either verify or correct that? And then can you characterize pro sales in the store relative to pro sales outside of the store through the outside sales force and the FDCs? Thanks. Well, taking your last part first, it's an ecosystem, like Ann said. We're actually not. We don't have goals or targets with respect to the separation of store and delivered sales. The point is actually lifting all sales, and that's what we've seen consistently in every market where we've rolled out capabilities. You know, originally, we worried, okay, our delivered sales are gonna begin to cannibalize the store. The opposite has proven true. And so we are progressing the way. In a way that we're pleased. With respect to your first question, factually, the pro did outperform the consumer in Q3, albeit at the narrowest margin we've seen in quite some time. If you actually normalize for commodity impact, the pro was essentially flat for the quarter. Okay, great. Thanks. And I guess my follow-up would be, when you guys measure big project versus small project, can you just clarify for us how you are determining what constitutes a big project versus a small? Is it like transaction size over $1,000? And, yeah, if you could clarify that for us, that'd be great. We infer from category sales and from class sales. You know, when you look at categories that are more likely to sell at higher volumes and larger projects, kitchens, flooring, millwork to an extent, we are doing some inference. We also ask our customers what they're seeing and what kind of projects they're working on. We use external survey data that tells us that the nature of projects is kind of shifting from larger to smaller, and so it's a triangulation. That's great. That's super helpful. Thank you so much, guys. Good luck in the fourth quarter. Thank you. Ms. Janci, I'd like to turn the floor back over to you for closing comments. Thanks, Christine, and thank you everyone for joining us today. We look forward to speaking with you on our fourth quarter earnings call in February. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.