Slides
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Wednesday, December 11th, 2024 2024 Analyst & Investor Conference DECEMBER 11, 2024
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Kate Pearlman VICE PRESIDENT, INVESTOR RELATIONS & TREASURER
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Agenda Jen Wilson Marketing Q&A Bill Boltz Merchandising Seemantini Godbole Technology Marvin Ellison CEO Perspectives Brandon Sink Financial Update Joe McFarland Home Services & Store Operations LUNCH BREAK BREAK Janice Dupré Human Resources Margi Vagell Supply Chain Quonta Vance Pro
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This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe”, “expect”, “anticipate”, “plan”, “desire”, “project”, “estimate”, “intend”, “will”, “should”, “could”, “would”, “may”, “strategy”, “potential”, “opportunity”, “outlook”, “scenario”, “guidance”, and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives (including objectives related to environmental and social matters), business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services including customer acceptance of new offerings and initiatives, macroeconomic conditions and consumer spending, share repurchases, and Lowe's strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties, and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe's and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, interest rate and currency fluctuations, home price appreciation or decreasing housing turnover, age of housing stock, the availability of consumer credit and of mortgage financing, trade policy changes or additional tariffs, outbreaks of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, geopolitical or armed conflicts, acts of both domestic and international terrorism, and other factors that can negatively affect our customers. Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in “Item 1A - Risk Factors” in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the Securities and Exchange Commission. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law. Forward-looking statements
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Management of Lowe's Companies, Inc. (the Company) uses certain non-GAAP financial measures to provide additional insight for analysts and investors in evaluating the Company's financial and operating performance. These non-GAAP financial measures should not be considered alternatives to, or more meaningful indicators of, the Company's financial measures as prepared in accordance with GAAP . The Company's methods of determining these non- GAAP financial measures may differ from the methods used by other companies and may not be comparable. Please refer to the appendix for a reconciliation between the Company’s reported GAAP and non-GAAP financial measures. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of the Canadian retail business. Non-GAAP disclosure
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Marvin R. Ellison CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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Strong results delivered: 2018-24E $57B Capital return to shareholders 6-year U.S. Sales growth Adjusted Operating Margin 6-year Adjusted EPS growth +132%+380bps+26% 1,2 1,2 Customer service scores +600bps 2.8x Increase in ROIC +222% Higher than S&P 500 total stock return 1.6x 6 1 3 Note: 1 Growth in Sales, Adjusted Operating Margin (which represents Adjusted Operating Income as a percentage of Sales), and Adjusted Earnings per Share (EPS) based on mid-point of full year 2024 outlook. 2 Adjusted Operating Margin and Adjusted EPS are non-GAAP financial measures. Please refer to the reconciliation of non-GAAP financial measures in the appendix for fiscal year 2018. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of the Canadian retail business. 3 Customer service scores measured Q3 2018 – Q3 2024. 4 Total stock return for Lowe’s and S&P 500 calculated for the periods November 30, 2018 – November 30, 2024. 5 Capital return to shareholders calculated for periods Q1 2019 – Q3 2024. 6 Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure and growth is based on four quarters ending November 1, 2024, compared to four quarters ending February 1, 2019. Refer to the appendix for a reconciliation of non-GAAP financial measures. Total stock return 4 4 5
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Accomplished leadership team 30+ YEARS experience 15+ YEARS experience 20+ YEARS experience 25+ YEARS experience 20+ YEARS experience 30+ YEARS experience 25+ YEARS experience 25+ YEARS experience Joe McFarland EVP, Stores Margi Vagell EVP, Supply Chain Bill Boltz EVP, Merchandising Janice Dupré EVP, Human Resources Seemantini Godbole EVP, Chief Digital & Information Officer Juliette Pryor EVP, Chief Legal Officer & Corp. Secretary Brandon Sink EVP, Chief Financial Officer Quonta Vance EVP, Pro & Home Services
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LAUNCHED PERPETUAL PRODUCTIVITY IMPROVEMENT (PPI) ACROSS THE COM PANY Culture of continuous improvement Perpetual Productivity Improvement
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AMPLE OPPORTUNITY TO EXPAND MARKET SHARE Home improvement market U.S. HOME IMPROVEMENT (HI) TOTAL ADDRESSABLE MARKET Large & highly fragmented market ~$1.0 T Lowe’s sales penetration 50% DIY/DIFM 50% PRO ~30% PRO ~70% DIY/DIFM Home improvement market
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MORE DIFFICULT BACKDROP THAN ANTICIPATED Home improvement marketoutlook Primary drivers remain strong Temporary headwinds Home price appreciation Disposable personal income Aging housing stock COVID pull forward of HI spending Inflation & higher interest rates Prioritizing experiences over goods
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SUPPORTED BY CYCLICAL AND STRUCTURAL DEMAND DRIVERS Home improvement market recovery CYCLICAL FACTORS DEMOGRAPHIC TRENDS Millennial household formation Baby Boomers aging in place Extension of remote work Lower interest & mortgage rates Improving consumer confidence Normalization of spending on goods
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Phased recovery expected …then engage in more complex remodel projects Lower interest & mortgage rates Improving consumer confidence Equity extraction, tapping record $35T homeowner equity 2025 AND BEYOND Homeowners re-engage first in simpler refresh and repair projects...
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OUR TARGET CUSTOMERS DIY and Pro customer overview DIY/DIFM SMALL -TO -MEDIUM PRO Millennial homeowners with kids Baby Boomers Tradespeople Repair & remodelers Property managers
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We Help. You Save. LOWE’S DISTINCT VALUE COMMITMENT THAT SETS US APART Delivering the most helpful experiences to save our customers time and money
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Drive Pro penetration Increase space productivity Accelerate online sales Expand home services CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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ONLY IN THE MIDDLE INNINGS OF OUR PPI JOURNEY More productivity still ahead Leveraging new AI-enabled solutions in our ongoing PPI roadmap, across the company Perpetual Productivity Improvement
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Key investment highlights Favorable long-term industry trends & resilient business model Well-positioned to capture share across DIY and Pro Responsible corporate citizen Well-capitalized and investing in omnichannel capabilities Significant productivity expansion opportunity Disciplined capital allocation
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Technology SEEMANTINI GODBOLE, CHIEF DIGITAL & INFORMATION OFFICER
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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MODERNIZED TECH PLATFORMS TO CREATE INTEGRATED OMNICHANNEL SHOPP ING EXPERIENCE Tech transformation, 2018-24 A single view of our customer, regardless of which channel(s) they use A single view of our inventory, regardless of where it is Contact Center Stores Lowes.com Jobsite Mobile App Regional Distribution Centers Stores Bulk Distribution Centers Flatbed Fulfillment Centers Import Distribution Centers
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Contact center JobsiteLowes.com Lowe’s appAssociate terminals Mobile smart device Omnichannel Network Single source for items, prices, promotions, inventory, sourcing, delivery, customers and orders Supporting consistent customer experience across all channels New omnichannel network OTHERONLINEIN STORE Designed for compatibility with leading AI-powered large language models, creating agility to rapidly deploy enhancements
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ENHANCING HOW WE SELL … HOW WE SHOP … AND HOW WE WORK New AI framework Sell Shop Work
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Expand home services Accelerate online sales Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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AI DESIGN ASSISTANT Style Your Space Personalized design recommendations Variety of style options Shoppable directly in the app
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SOURCING DESIGN INSPIRATION FROM SOCIAL MEDIA INFLUENCERS Lowe’s Creator storefronts
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1,000+ HOW -TO VIDEOS AIMED AT HELPING DIY … FROM BEGINNER TO ADV ANCED DIY project know-how available online
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LAUNCHING THE FIRST PRODUCT MARKETPLACE IN THE U.S. HOME IMPROVEMENT INDUSTRY Lowe’s new online marketplace
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WIDER ASSORTMENT AVAILABLE ONLINE AND ON LOWE’S MARKETPLACE Enhanced omniselling capabilities
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HELPING CUSTOMERS WALK THROUGH THE STEPS OF A COMPLEX PURCHASE Guided selling
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Technology recap Tech at center of Total Home Strategy 2025 New AI framework Launching a marketplace Grow online sales
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Merchandising BILL BOLTZ, EXECUTIVE VICE PRESIDENT, MERCHANDISING
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Merchandising key wins, 2023-24 Enhanced our brand portfolio Introduced new and innovative products Rural assortment expanded to over 300 stores Expanded merchandising services team (MST) & MST responsibilities
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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WITH WELL -KNOWN NATIONAL BRANDS WITH LONGSTANDING LOYAL PRO AND DIY CUSTOMERS… Balanced brand strategy
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….AND PRIVATE BRANDS THAT DRIVE DIFFERENTIATION, LOYALTY AND PROFITABILITY Balanced brand strategy
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Added since 2022 EXPANDING PRO BRAND PORTFOLIO TO BETTER SERVE TRADES PROFESSIONA LS Building out our Pro brand arsenal
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WIDEST SELECTION OF APPLIANCES AND UNPARALLELED OPE ASSORTMENT Adding to our leading DIY assortment Additional Power Brands Outdoor Power Equipment (OPE) Appliances
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WITH SIX $1 BILLION BRANDS … AND LAUNCHING LOWE’S ESSENTIALS Driving private brand penetration NEW $1B+ Brands
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Tailoring assortments at a store level based on… MAKING EVERY LOWE’S FEEL LIKE A HOMETOWN STORE Localization drives space productivity Climate Demographics, including income & generational differences Geography Home types & sizes Lifestyle trends & preferences Regulations & building codes
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FINALIZING ROLLOUT OF RURAL ASSORTMENT TO 150 ADDITIONAL STORES Leaning into our rural footprint Expanded Garden Center assortment Added convenience items like pet food & livestock feed Introduced new UTV offering for outdoor lifestyle
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SHIFTING FOCUS TO HIGHER VELOCITY SKUs Driving inventory productivity
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TAKING OUR CATEGORY ACCELERATORS ACROSS OUR STORES TO DRIVE SPACE PRODUCTIVITY Expanding categories nationally Pet and automotive categoriesWorkwear showroom
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Merchandising PPI Pricing and promotional strategies Product cost management Inventory productivity Perpetual Productivity Improvement Increase private brand penetration Expand Lowe’s Media Network
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Merchandising recap Delivering value for DIY & Pro Exciting & innovative assortments Improving space productivity Driving profitability through PPI
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Marketing JEN WILSON, SENIOR VICE PRESIDENT, CHIEF MARKETING OFFICER
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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MORE VALUE AND MORE REASONS TO SHOP LOWE’S My Lowe’s Rewards Another level of rewards with MLR Credit Card 5% off every day on eligible purchases Loyalty designed for DIY Earn rewards and enjoy member-only perks
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RELAUNCHING WITH A SIMPLIFIED PROGRAM TO ACCELERATE ADOPTION My Lowe’s Pro Rewards Designed for the small-to-medium Pro Single currency & intuitive customer experience Easier and faster for Pros to earn rewards and redeem them
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SPECIAL PRICING AND KEY SELLING EVENTS Member-only deals
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LEVERAGING INSIGHTS FROM OUR LOYALTY PROGRAMS & CUSTOMER SHOPPING PATTERNS High-performing data platform Creating better connections with our DIY and Pro customers through a more relevant and tailored experience … anticipating what they need next.
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HELPING MY LOWES REWARDS MEMBERS MANAGE ROUTINE MAINTENANCE AND WARRANTIES Digital Home Platform Customers often misplace warranties and product information So we’re automatically adding this information to their profile … … and providing them with maintenance reminders
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TARGETED CAMPAIGNS ACROSS THE SPORTING WORLD Reaching a broader customer base Lionel Messi and Copa America Official home improvement retailer of the NFL
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Connecting our suppliers with a captive audience Now leveraging consumer insights from My Lowe’s Rewards Reaching customers throughout shopping journey on Lowes.com, social media and other sites Advertising solutions that deliver growth.
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WITH A MULTI -PRONGED APPROACH TO GROW LOWE’S MEDIA NETWORK Accelerating growth Talented internal team with expertise in retail media and retail Measurable and actionable results for our suppliers Leveraging insights about consumer shopping patterns Return on Ad Spend in 2024 +50% Expanding to new channels like paid search, e-mail, in-store audio and larger placements on the Lowe’s app LOWE’S MEDIA NETWORK
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Marketing recap New DIY loyalty program Customer data platform powering insights, marketing & sales Differentiated home improvement media solutions Relaunching Pro loyalty program
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Pro QUONTA VANCE, EXECUTIVE VICE PRESIDENT, PRO & HOME SERVICES
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UP FROM 19% IN 2019… AND ~25% IN 2022 Pro penetration of ~30% Overhauled Pro product and service offering Dedicated service U.S. stores resetLaunched Pro loyalty program Job lot quantities
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Recent Pro wins, 2023-24 EHANCED PRO DIGITAL OFFERING INVESTED IN PRO NEVER OUT SKUs ADDED MORE ESSENTIAL PRO BRANDS +High Single Digit Pro customer service scores +200bps1 2-year Pro growth 1Customer service scores measured from Q3 2022 – Q3 2024
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Klein tools returned to Lowe’s Klein MODBox Klein KNECT CONTINUING TO IMPROVE PERFORMANCE OF ITS CLASSIC TOOLS FOR ELECTRICIANS & HVAC New products since we rekindled partnership +150
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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LEVERAGING INSIGHTS FROM MY LOWE'S PRO REWARDS Enhance Pro CRM Enabling our inside and outside salesforce to acquire, grow and manage Pro accounts
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ENHANCING CAPABILITIES TO GROW MARKET SHARE Increase share of planned spend Lowe’s Pro fulfillment capabilities Pro extended aisle
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PRESENT Current manual process FUTURE New Pro extended aisle EXPANDED CATALOG FOR SPECIAL ORDERS, WITH SUPPLIER DELIVERY DIRE CT TO JOBSITE Pro extended aisle Associate easily builds a competitive quote Pro receives quote within minutes and places the order Supplier delivers large, specialized order direct to jobsite
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HYBRID APPROACH TAILORED TO LOCAL MARKET Enhancing Pro fulfillment capabilities Big & Bulky Market Delivery Pro Jobsite Delivery 0 Flatbed Fulfillment Center (FFC) 0 Store Fulfillment 0 Lowe’s Pro Supply 0 0 0Fully Integrated Gig Network Pro Extended Aisle
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SEAMLESS ACCESS FOR STORES TO SELL FROM LPS CATALOG Leveraging Lowe’s Pro Supply Enabling larger order delivery by making LPS inventory easily accessible for Pro orders
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Pro recap Destination for Pro convenience and planned purchases Relaunching Pro loyalty program Opening a new Pro extended aisle Expanding Pro fulfillment capabilities
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Home Services & Store Operations JOE MCFARLAND, EXECUTIVE VICE PRESIDENT, STORES
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Create a loyalty ecosystem Expand home services Helping to solve problems and fulfill dreams for the home
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Improved store shopping environment CAPITAL INTENSIVE INVESTMENTS THAT HELP US OPTIMIZE OUR LARGER S TORE FOOTPRINT
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GREAT SOLUTIONS FOR BOTH SIMPLE INSTALLS AND LARGER PROJECTS Easy installs through central selling Central selling team builds quotes and provides customers personalized support to close the sale Red vest associates focused on serving customers in store and generating leads
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A FAST, INTUITIVE DIGITAL PAYMENT SOLUTION FOR INSTALLATION PROJ ECTS Tender anywhere Red vest associates focused on serving customers in store and generating leads Ready to Purchase Quote Purchased Customer receives a notification when a quote is ready for review Purchase Quote Online Customer can then digitally sign a contract and checkout on Lowes.com or mobile app without needing to call or visit a store Project management team is notified and moves forward with delivery & installation details
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BOLSTERING THE SALES TEAM OUTSIDE THE STORE Enabling sales in customer homes Our In-Home Consultants now use a single, intuitive system to assist customers in home with their installation quotes…simplifying the process
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Vendor sells, furnishes & installs THIRD- PARTY MODEL FOR MORE COMPLEX INSTALLS LIKE BATH, WATER HEATERS, & HVAC
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Store Operations
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Store Ops transformation, 2018-24 Mobile smart devices to empower associates Industry-leading labor scheduling system Enhanced store operating systems Meaningful gains in labor productivity and operating margin
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OUR KNOWLEDGABLE, FRIENDLY ASSOCIATES EMBODY “ WE HELP. YOU SAVE. ” Hardworking frontline team Customer service scores1 +200 1Customer service scores measured from Q3 2022 – Q3 2024 bps
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Assisted self-checkout and expanded selling space Expanded BOPIS staging area BEST -IN -CLASS SHOPPING EXPERIENCE Front-end transformation underway
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TECH- DRIVEN SOLUTIONS TO STREAMLINE THE SHOPPING EXPERIENCE AND SAVE TIME In-store mode Quickly navigate through the store Review product specs Find product locations
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HELPING OUR ASSOCIATES FIND OUR CUSTOMERS WHO NEED ASSISTANCE New Dwell technology solution Sends associates to serve the customers needing help Leverages AI computer vision to identify where customers are lingering in aisles
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AI -POWERED STORE COMPANION ON MOBILE SMART DEVICES FOR FRONTLINE Product knowledge at our fingertips Provides product recommendations based on project type Customized to Lowe’s products and policies Collects feedback from associates
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EXPANDING STORE BASE TO SERVE FAST -GROWING MARKETS, WITH 10 -15 N EW STORES PER YEAR New store growth
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Store operations PPI Further reduce return rates Finalize front-end transformation Optimize freight flow Improve omni fulfillment experience Leverage new Dwell technology Perpetual Productivity Improvement
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Home Services & Store Operations recap Easy-to-use home services solutions Drive productivity New store growth Enhance customer experience
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Supply Chain MARGI VAGELL, EXECUTIVE VICE PRESIDENT, SUPPLY CHAIN
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CAPTURING MARKET SHARE ACROSS DIY AND PRO Total Home Strategy 2025 Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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IMPROVING OUR EFFICIENCY, SPEED AND FLEXIBILITY Supply chain transformation, 2018-24 Network capacity and service Market delivery for big & bulky products Flow management Fast & flexible delivery options
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Recent wins, 2023-24 Finalized nationwide rollout of Market Delivery Model Expanded parcel delivery capabilities Extended same-day delivery through Gig network
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130+ Supply chain overview WITH FACILITIES 65+ MILLION SQUARE FEET Total Home Flatbed Distribution Centers (FDC) Online Fulfillment Centers Import Distribution Centers (IDC) Cross-dock Terminals (XDT) Flatbed Fulfillment Centers (FFC) Parcel Stores Regional Distribution Centers (RDC) Bulk Distribution Centers (BDC)
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Enhanced supply chain planning MODERNIZING OUR INVENTORY REPLENISHMENT AND DEMAND PLANNING SYSTEMS TO Simplified & unified experience FROM Multiple interfaces Demand Planner / Replenishment Specialist Demand Planning System Purchase Order System Replenishment & Allocation System Demand Planner / Replenishment Specialist
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ASSET -LIGHT APPROACH THAT LEVERAGES EXISTING FACILITIES AND PRO EXTENDED AISLE Enhancing Pro fulfillment capabilities Big & Bulky Market Delivery Pro Jobsite Delivery 0 Flatbed Fulfillment Center (FFC) 0 Store Fulfillment 0 Lowe’s Pro Supply 0 0 0Fully Integrated Gig Network Pro Extended Aisle
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Currently moving appliances, riders, grills, water heaters and patio ADDING NEW BIG & BULKY PRODUCTS THROUGH MARKET DELIVERY Flowing more through market delivery Adding generators and larger riding mowers Vendor Bulk DC Cross-dock terminal 3PL delivery Customer 1 2 3 4
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Supply chain PPI Leveraging technology & process optimization Reducing transportation costs Rationalizing our footprint Perpetual Productivity Improvement
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CATALYST FOR SALES AND PRODUCTIVITY Supply chain recap Improve end-to-end inventory visibility Increase speed to shelf Enhance Pro & DIY fulfillment capabilities
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Human Resources JANICE DUPRÉ, EXECUTIVE VICE PRESIDENT, HUMAN RESOURCES
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Becoming the employer of choice in retail Industry-leading participation rate of >90% in our annual employee engagement survey Good jobs Sense of belonging Promising futures
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STARTING WITH GOOD PAY, COMPREHENSIVE BENEFITS AND COMPETITIVE B ONUSES Good jobs $4B+ in incremental front-line wages and share-based compensation (2018–24) Competitive wages, bonuses & benefits Flexible and dependable scheduling
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CONNECTING WITH OUR ASSOCIATES BY ENGAGING AT WORK AND IN THE COMMUNITY Sense of belonging
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WE'VE CHANGED OUR APPROACH BUT NOT OUR VALUES Commitment to diversity & inclusion 1. One associate engagement group, supported across field and corporate 2. Concentrate on: • Safe and affordable housing • Community improvement • Disaster relief and recovery • Skilled trades education 3. Limit participation in external surveys 1. Eight separate Business Resource Groups (BRGs), only supported in corporate offices 2. Sponsorship of various festivals, parades & fairs 3. Participate in affinity-group surveys CURRENTPAST UNCHANGED Our commitment to fostering an environment where all individuals are welcomed and respected
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HIRING AND PROMOTING ON TALENT ALONE Lowe’s senior leadership team
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OUR COMMITMENT IS REFLECTED IN THE RESULTS Diversity results TEAM 2018 DIVERSITY %1 2024 DIVERSITY %2 BPS IMPROVEMENT BOARD 46% 62% 1600 EVPs 10% 67% 5700 SVPs 37% 63% 2600 1 Figures as of Q1 2018 2 Figures as of Q4 2024
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RETAINING TALENT AND CREATING CAREER PATHS Opportunities for career advancement New frontline positions added since 2018 10,000 Department Supervisors 2,500+ Assistant Store Managers Store leadership roles filled internally >85% ~90% Store leaders started in hourly roles
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ADDRESSING TRADE LABOR SHORTAGE IN U.S. Support forskilled trades education Pre-apprentice development program for Lowe’s associates 5-year, $50 million commitment to train 50,000 tradespeople
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Becoming the employer of choice in retail Good jobs Sense of belonging Promising futures
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Financial update BRANDON SINK, CHIEF FINANCIAL OFFICER
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Affirming 2024 financial outlook 1 Adjusted Operating Margin represents Adjusted Operating Income as a percentage of Sales. 2 Adjusted Operating Income, Adjusted Operating Margin, and Adjusted Diluted Earnings per Share (EPS) are non-GAAP financial measures that exclude the gains associated with the 2022 sale of the Canadian retail business, recorded in the second and third quarter of 2024. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of the Canadian retail business. Adjusted Diluted EPS2 $11.80- $11.90 Capital Expenditures ~$2B Adjusted Operating Margin1,2 12.3 to 12.4 %~$83.0-83.5B Sales Comparable Sales (-3.0% to -3.5%)
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HEADWINDSTAILWINDS 2025 home improvement sector outlook Home price appreciation Continued demand for Pro services Elevated interest & mortgage rates Weak consumer sentiment Real disposable income growing faster than inflation Lock-in effect Record oldest U.S. housing stock BALANCE OF EXPECTED DEMAND DRIVERS AND PERSISTENT CHALLENGES Lowe’s relevant market is expected to range from -3% to +3% in 2025 (Relevant market ~70% DIY / ~30% Pro vs. Total Market of 50% Pro / 50% DIY)
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DRIVING LONG- TERM SHARE GAINS THROUGH MULTIPLE GROWTH INITIATIVES Investing in the Total Home Strategy Drive Pro penetration Increase space productivity Accelerate online sales Expand home services Create a loyalty ecosystem Helping to solve problems and fulfill dreams for the home
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UNCERTAINTY AROUND TIMING AND VELOCITY OF HOME IMPROVEMENT MARKET RECOVERY 2025 scenario planning OUTLOOK 20243 ROBUST MARKET MODERATE MARKET WEAK MARKET TOTAL SALES Comp Sales $83.0 – 83.5B (3.5%) – (3.0%) $87B +4% $84B +1% $82B (2%) ADJ. OPERATING MARGIN % of Sales 12.3 - 12.4% 12.7% 12.4% 12.0% ROIC 32% 30% 28% RELEVANT MARKET +3% Flat (3%) Fiscal 2025 Scenarios1,2,3 1 Fiscal 2025 Return on Invested Capital (ROIC) in all scenarios assumes repayment of $2.5B in bond maturities, an effective tax rate of ~25%, and capital expenditures of ~$2.5B. Share repurchase assumptions are ~$1.5B in the Robust Market scenario, ~$1B in the Moderate Market scenario, and ~$0.5B in the Weak Market scenario. 2 Fiscal 2025 scenarios do not contemplate impact of potential incremental tariffs, as timing and details remain uncertain. 3 Adjusted Operating Margin is a non-GAAP measure and ROIC is calculated using a non-GAAP financial measure. Full year 2024 outlook for Adjusted Operating Margin excludes the gains associated with the 2022 sale of the Canadian retail business, recorded in the second and third quarter of 2024. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of the Canadian retail business.
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FY 2026+ AFTER EXPECTED HI MARKET RETURN TO SUSTAINABLE GROWTH
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Base HI Market Outlook Accelerated HI Market Outlook ONCE HOME IMPROVEMENT MARKET STABILIZES, EXPECT ANNUAL LSD TO MSD GROWTH RATES Returning to long-term market growth RELEVANT MARKET GROWTH RELEVANT MARKET GROWTH +Low Single Digit MEDIUM- TO-LONG TERM MARKET OUTLOOK (3 TO 5 YEARS) +Mid Single Digit CYCLICAL DRIVERS OF GROWTH • Lower interest and mortgage rates • Improving consumer confidence • Strong home prices • Strong disposable income • Aging housing stock CYCLICAL DRIVERS BOLSTERED BY LONG- TERM TRENDS • Millennial household formation • Baby boomers aging in place • Continued remote work • Home equity extraction
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SALES LEVERAGE AND PRODUCTIVITY GAINS DELIVER OPERATING MARGIN AND ROIC EXPANSION Lowe’s profit expansion PROFITABILITY ALGORITHM • Operating margin expansion driven by sales leverage • Gross margins roughly flat as PPI initiatives offset Pro & Supply Chain investments • OPEX PPI initiatives offset inflationary pressures & strategic investments • Delivering on Lowe’s value commitment to customers Base Market Growth (+LSD) Accelerated Market Growth (+MSD) COMP SALES GROWTH +~3% / YEAR +~5% / YEAR ROIC +~50 BPS / YEAR +~100 BPS / YEAR OPERATING MARGIN +~30 BPS / YEAR +~50 BPS / YEAR SALES PERFORMANCE RELATIVE TO MARKET +100 BPS +100 BPS Expectations for 2026+ after market returns to sustainable growth
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MERCHANDISING AND SUPPLY CHAIN PPI Merchandising and Supply Chain PPI KEY EFFORTSMULTI - YEAR IMPACT • Optimize product margins to support every day competitive prices for customers • Win-win supplier relationships • Leverage supply chain as a catalyst to enable sales and inventory productivity ~$500M Product cost management Increase private brand penetration Accelerate growth of Lowe’s Media Network KEY EFFORTSAVERAGE ANNUAL IMPACT Reduce transportation costs Rationalize our supply chain footprint Expectations for 2025+ Data-driven pricing and promotions Drive inventory productivity Leverage supply chain technology and process optimization
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STORE OPERATIONS AND OTHER OPEX PPI OPEX Productivity • Supports Lowe’s value commitment to customers: We Help. You Save. • Drive strong customer satisfaction and loyalty through seamless omnichannel shopping experience • Higher levels of associate engagement ~$500M Finalize front-end transformation Improve omni fulfillment experience Optimize freight flow New Dwell technology KEY EFFORTSAVERAGE ANNUAL IMPACT Tech-enabled productivity across all support functions Expectations for 2025+ Further reduce returns rate
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Enhanced shareholder returns Value creation roadmap Core operational excellence Optimized capital deployment Significant cash flow generation
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ROBUST CASH FLOWS AND BEST -IN -CLASS CAPITAL ALLOCATION DRIVE VAL UE CREATION Robust shareholder returns $9B to $10B per year OPERATING CASH FLOWS ~$2.5B per year (includes 10-15 new stores per year) CAPITAL EXPENDITURES $1B to $2B per year after returning to leverage target NET DEBT $7.5B to $9.5B per year CASH AVAILABLE TO RETURN TO SHAREHOLDERS Commitment to BBB+/Baa1 debt rating Expectations for 2026 and beyond after market returns to sustainable growth
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Strong record of capital allocation FUND GROWTH Invest in the Business Strategic Outlays • Run the business • Strategic investments • New store growth • Build or acquire capabilities • Minimum risk adjusted hurdle rate: Mid-teens GROWTH OPPORTUNISTIC RETURN OF CAPITAL Balance Sheet Management Dividends • Return to target leverage (Adjusted Debt to EBITDAR) ratio of 2.75x • Solid investment grade rating of BBB+ / Baa1 • Target payout ratio of 35% • Strong track record of increases for over 25+ years STRONG CONSISTENCY Share Repurchases • Return excess capital to shareholders via share repurchases • ~$12B authorization1 VALUE-ENHANCING 1Share repurchase authorization as of November 1, 2024.
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Key investment highlights Favorable long-term industry trends & resilient business model Well-positioned to capture share across DIY and Pro Responsible corporate citizen Well-capitalized and investing in omnichannel capabilities Significant productivity expansion opportunity Disciplined capital allocation
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Appendix
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Management of Lowe's Companies, Inc. (the Company) uses certain non-GAAP financial measures to provide additional insight for analysts and investors in evaluating the Company's financial and operating performance. These non-GAAP financial measures should not be considered alternatives to, or more meaningful indicators of, the Company's financial measures as prepared in accordance with GAAP . The Company's methods of determining these non-GAAP financial measures may differ from the methods used by other companies and may not be comparable. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of the Canadian retail business. Reconciliation of Non-GAAP measures
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The Company has provided the non-GAAP financial measures of adjusted operating income; adjusted operating margin; and adjusted diluted earnings per share for fiscal year 2018. These measures exclude the impacts of certain items, as further described below, not contemplated in the Company's business outlook for fiscal year 2018. Fiscal 2018 Impacts • During the fourth quarter of fiscal 2018, the Company recorded $952 million of goodwill impairment associated with its Canadian operations (Canadian goodwill impairment). • On August 17, 2018, the Company committed to exit its Orchard Supply Hardware operations. As a result, the Company recognized pre-tax charges of $561 million associated with long-lived asset impairment and discontinued projects, accelerated depreciation and amortization, severance, and lease obligation costs in fiscal year 2018 (Orchard Supply Hardware charges). • On October 31, 2018, the Company committed to close 20 under-performing stores across the U.S. and 31 locations in Canada, including 27 under- performing stores. As a result, the Company recognized pre-tax charges of $271 million associated with long-lived asset impairment, severance, lease obligation costs, and accelerated depreciation in fiscal year 2018 (U.S. and Canada charges). • On November 20, 2018, the Company announced its plans to exit retail operations in Mexico and was exploring strategic alternatives. The Company recognized $244 million associated with long-lived asset impairment in fiscal year 2018 (Mexico impairment charges). • During the third quarter of fiscal 2018, the Company identified certain non-core activities within its U.S. home improvement business to exit, including Alacrity Renovation Services and Iris Smart Home. As a result, the Company recognized pre-tax charges of $46 million primarily associated with long- lived asset impairment and inventory write-downs in fiscal year 2018 (Non-core activities charges). • During fiscal year 2018, the Company recorded a pre-tax charge of $13 million associated with severance costs due to the elimination of the Project Specialists Interiors position (Project Specialists Interiors charge). Operating Performance
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The following measures are presented for comparison of operating performance for the fiscal year ended February 1, 2019: Operating Performance Year Ended Adjusted Operating Income (in millions, except percentage data) February 1, 2019 Net Sales, As Reported $ 71,309 Operating Income, As Reported $ 4,018 Canadian goodwill impairment 952 Orchard Supply Hardware charges 561 U.S. and Canada charges 271 Mexico impairment charges 244 Non-core activities charges 46 Project Specialists Interiors charge 13 Adjusted Operating Income $ 6,105 Operating Margin, % of sales 5.64% Adjusted Operating Margin, % of sales 8.56%
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Operating Performance Year Ended February 1, 2019 Adjusted Diluted Earnings Per Share Pre-Tax Earnings Tax1 Net Earnings Diluted Earnings Per Share, As Reported $ 2.84 Canadian goodwill impairment 1.17 (0.03) 1.14 Orchard Supply Hardware charges 0.68 (0.17) 0.51 U.S. and Canada charges 0.33 (0.08) 0.25 Mexico impairment charges 0.30 0.01 0.31 Non-core activities charges 0.06 (0.02) 0.04 Project Specialists Interiors charge 0.02 — 0.02 Adjusted Diluted Earnings Per Share $ 5.11 1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share.
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Return on Invested Capital Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Lowe's believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours. We define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and shareholders' (deficit)/equity. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the most comparable GAAP financial measure. The calculation of ROIC, together with a reconciliation of net earnings to Lease adjusted NOPAT, is as follows: Capital / Asset productivity measures
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Capital / Asset productivity measures ROIC For the Periods Ended (in millions, except percentage data) November 1, 2024 February 1, 2019 Numerator Net Earnings $ 6,853 $ 2,314 Plus: Interest expense, net 1,333 624 Operating lease interest1 172 206 Provision for income taxes 2,137 1,080 Lease adjusted net operating profit 10,495 4,224 Less: Income tax adjustment2 2,495 1,344 Lease adjusted net operating profit after tax $ 8,000 $ 2,880 Denominator Average debt and shareholders’ (deficit)/equity 3 $ 25,603 $ 25,713 Net Earnings to Average Debt and Shareholders’ (Deficit)/Equity 26.8% 9.0% Return on Invested Capital 31.2% 11.2% 1 Includes a proforma estimate of operating lease interest for the period ended February 1, 2019, prior to the adoption of ASU 2016-02, Leases (Topic 842). 2 Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax rate, which was 23.8% and 31.8% for the periods ended November 1, 2024, and February 1, 2019, respectively. 3 Average debt and shareholders' (deficit)/equity is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders' (deficit)/equity.