Item 1. Financial Statements.

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Item 1. Financial Statements.

THE HOME DEPOT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


in millions, except per share data	November 2, 2025		February 2, 2025
Assets
Current assets:
Cash and cash equivalents	$	1,684	$	1,659
Receivables, net	6,765		4,903
Merchandise inventories	26,203		23,451
Other current assets	1,463		1,670
Total current assets	36,115		31,683
Net property and equipment	27,683		26,702
Operating lease right-of-use assets	9,041		8,592
Goodwill	22,267		19,475
Intangible assets, net	10,416		8,983
Other assets	752		684
Total assets	$	106,274	$	96,119

Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt	$	3,200	$	316
Accounts payable	13,237		11,938
Accrued salaries and related expenses	2,245		2,315
Sales taxes payable	668		628
Deferred revenue	2,543		2,610
Income taxes payable	46		832
Current installments of long-term debt	6,471		4,582
Current operating lease liabilities	1,417		1,274
Other accrued expenses	4,540		4,166
Total current liabilities	34,367		28,661
Long-term debt, excluding current installments	46,343		48,485
Long-term operating lease liabilities	7,986		7,633
Deferred income taxes	2,883		1,962
Other long-term liabilities	2,579		2,738
Total liabilities	94,158		89,479
Contingencies (Note 9)
Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,801 shares at November 2, 2025 and 1,800 shares at February 2, 2025; outstanding: 995 shares at November 2, 2025 and 994 shares at February 2, 2025	90		90
Paid-in capital	14,562		14,117
Retained earnings	94,255		89,533
Accumulated other comprehensive loss	(820)		(1,129)
Treasury stock, at cost, 806 shares at November 2, 2025 and February 2, 2025	(95,971)		(95,971)
Total stockholders’ equity	12,116		6,640
Total liabilities and stockholders’ equity	$	106,274	$	96,119

—————

See accompanying notes to consolidated financial statements.


Fiscal Q3 2025 Form 10-Q			1

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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Three Months Ended				Nine Months Ended
in millions, except per share data	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Net sales	$	41,352	$	40,217	$	126,485	$	119,810
Cost of sales	27,537		26,792		84,086		79,536
Gross profit	13,815		13,425		42,399		40,274
Operating expenses:
Selling, general and administrative	7,636		7,212		22,930		21,023
Depreciation and amortization	826		795		2,428		2,220
Total operating expenses	8,462		8,007		25,358		23,243
Operating income	5,353		5,418		17,041		17,031
Interest and other (income) expense:
Interest income and other, net	(32)		(30)		(81)		(171)
Interest expense	628		625		1,818		1,683
Interest and other, net	596		595		1,737		1,512
Earnings before provision for income taxes	4,757		4,823		15,304		15,519
Provision for income taxes	1,156		1,175		3,719		3,710
Net earnings	$	3,601	$	3,648	$	11,585	$	11,809

Basic weighted average common shares	993		991		992		990
Basic earnings per share	$	3.63	$	3.68	$	11.68	$	11.93

Diluted weighted average common shares	995		993		994		992
Diluted earnings per share	$	3.62	$	3.67	$	11.65	$	11.90

—————

See accompanying notes to consolidated financial statements.


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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Net earnings	$	3,601	$	3,648	$	11,585	$	11,809
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	13		(155)		302		(414)
Cash flow hedges	2		3		7		(48)

Total other comprehensive income (loss), net of tax	15		(152)		309		(462)
Comprehensive income	$	3,616	$	3,496	$	11,894	$	11,347

—————

See accompanying notes to consolidated financial statements.


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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Common Stock:
Balance at beginning of period	$	90	$	90	$	90	$	90
Shares issued under employee stock plans, net	—		—		—		—

Balance at end of period	90		90		90		90

Paid-in Capital:
Balance at beginning of period	14,438		13,731		14,117		13,147
Shares issued under employee stock plans, net	15		10		48		372
Stock-based compensation expense	109		94		397		316

Balance at end of period	14,562		13,835		14,562		13,835

Retained Earnings:
Balance at beginning of period	92,943		87,357		89,533		83,656

Net earnings	3,601		3,648		11,585		11,809
Cash dividends	(2,289)		(2,234)		(6,863)		(6,694)

Balance at end of period	94,255		88,771		94,255		88,771

Accumulated Other Comprehensive Loss:
Balance at beginning of period	(835)		(787)		(1,129)		(477)

Foreign currency translation adjustments, net of tax	13		(155)		302		(414)
Cash flow hedges, net of tax	2		3		7		(48)

Balance at end of period	(820)		(939)		(820)		(939)

Treasury Stock:
Balance at beginning of period	(95,971)		(95,971)		(95,971)		(95,372)
Repurchases of common stock	—		—		—		(599)
Balance at end of period	(95,971)		(95,971)		(95,971)		(95,971)
Total stockholders’ equity	$	12,116	$	5,786	$	12,116	$	5,786

—————

See accompanying notes to consolidated financial statements.


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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
in millions	November 2, 2025		October 27, 2024
Cash Flows from Operating Activities:
Net earnings	$	11,585	$	11,809
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization, excluding amortization of intangible assets	2,606		2,472
Intangible asset amortization	436		280
Stock-based compensation expense	408		328
Changes in receivables, net	(1,005)		(668)
Changes in merchandise inventories	(1,974)		(1,111)
Changes in other current assets	249		19
Changes in accounts payable and accrued expenses	849		1,963
Changes in deferred revenue	(88)		(188)
Changes in income taxes payable	(725)		69
Changes in deferred income taxes	479		170
Other operating activities	158		(4)
Net cash provided by operating activities	12,978		15,139

Cash Flows from Investing Activities:
Capital expenditures	(2,621)		(2,384)
Payments for businesses acquired, net	(5,248)		(17,613)
Other investing activities	104		85
Net cash used in investing activities	(7,765)		(19,912)

Cash Flows from Financing Activities:
Proceeds from short-term debt, net	2,884		1,344
Proceeds from long-term debt, net of discounts	2,111		9,983
Repayments of long-term debt	(3,404)		(1,355)
Repurchases of common stock	—		(649)
Proceeds from sales of common stock	185		231
Cash dividends	(6,863)		(6,694)
Other financing activities	(147)		(223)
Net cash (used in) provided by financing activities	(5,234)		2,637
Change in cash and cash equivalents	(21)		(2,136)
Effect of exchange rate changes on cash and cash equivalents	46		(93)
Cash and cash equivalents at beginning of period	1,659		3,760
Cash and cash equivalents at end of period	$	1,684	$	1,531

Supplemental Disclosures:
Cash paid for interest, net of interest capitalized	$	1,835	$	1,640
Cash paid for income taxes	3,990		3,479
Non-cash acquisition purchase consideration	—		321

—————

See accompanying notes to consolidated financial statements.


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THE HOME DEPOT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

**1.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of The Home Depot, Inc., together with its subsidiaries (the “Company,” “The Home Depot,” “Home Depot,” “we,” “our” or “us”), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2024 Form 10-K. During the nine months ended November 2, 2025, there were no significant changes to our significant accounting policies as disclosed in the 2024 Form 10-K.

Receivables, net

The following table presents components of receivables, net:


in millions	November 2, 2025		February 2, 2025
Card receivables	$	1,258	$	1,019
Rebate receivables	1,756		1,404
Customer receivables	3,182		1,896
Other receivables	569		584
Receivables, net	$	6,765	$	4,903

Card receivables consist of payments due from financial institutions for the settlement of credit card and debit card transactions. Rebate receivables represent amounts due from vendors for volume and co-op advertising rebates. Customer receivables relate to credit extended directly to certain customers in the ordinary course of business. The valuation allowance related to our receivables was not material to our consolidated financial statements at November 2, 2025 or February 2, 2025.

Supplier Finance Program

We have a supplier finance program whereby participating suppliers may, at their sole discretion, elect to receive payment for one or more of our payment obligations, prior to their scheduled due dates, at a discounted price from participating financial institutions. The payment terms we negotiate with our suppliers are consistent, irrespective of whether a supplier participates in the program, and we are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program. We do not reimburse suppliers for any costs they incur for participation in the program, and we have not pledged any assets as security or provided any guarantees as part of the program. Our outstanding payment obligations under our supplier finance program were $333 million at November 2, 2025 and $598 million at February 2, 2025 and are recorded within accounts payable on our consolidated balance sheets, and the associated payments are included in operating activities within our consolidated statements of cash flows.

Income Taxes

On July 4, 2025, the legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”) was signed into law in the U.S., which contains a broad range of tax provisions, including the allowance to expense 100% of the cost of qualified property and immediate expensing of domestic research and experimental expenditures. While we continue to assess its implications, we do not expect the provisions of the OBBBA to have a material impact to our estimated fiscal 2025 effective tax rate. We have realized, and expect to continue to realize, a reduction in our fiscal 2025 cash tax payments due to the above mentioned provisions.

In fiscal 2024, the Internal Revenue Service provided automatic income tax relief to taxpayers in certain southeastern states, extending the timeline to make certain tax payments. As a result, our fourth quarter fiscal 2024 estimated federal tax payment was deferred and paid in the first quarter of fiscal 2025.


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Recently Adopted Accounting Pronouncements

We did not adopt any new accounting pronouncements during the nine months ended November 2, 2025 that had a material impact on our consolidated financial condition, results of operations, or cash flows.

Recently Issued Accounting Pronouncements

ASU No. 2025-06. In September 2025, the FASB issued ASU No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which is intended to modernize internal-use software guidance by removing all references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. ASU No. 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statements.

Recent accounting pronouncements pending adoption not discussed above or in the 2024 Form 10-K are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

**2.**SEGMENT REPORTING AND NET SALES

Segment Reporting

The Company defines its segments based on how internally reported financial information is regularly reviewed by the chief operating decision maker (“CODM”), our President and Chief Executive Officer, to analyze financial performance, make decisions, and allocate resources.

Primary Segment. We are engaged in retail operations and sell a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products both in stores and online. We also provide a number of services, including home improvement installation services, and tool and equipment rental. We currently conduct these operations in the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico, each of which represents an operating segment. For disclosure purposes, we aggregate these three geographic operating segments into one reportable segment (the “Primary segment”) due to the similar nature of their operations and economic characteristics.

Other. As discussed in Note 10, in June 2024, we acquired SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor through branches located throughout the U.S. On September 4, 2025, SRS completed the acquisition of GMS, a leading distributor of specialty building products, including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. GMS became an additional vertical within SRS referred to as interior and construction products, and SRS is now organized as four different lines of business: roofing and building products, interior and construction products, landscape, and pool. We have determined that each of these four lines of business represents an operating segment, none of which meets the thresholds prescribed under Accounting Standards Codification Topic 280: “Segment Reporting” to be deemed a reportable segment. Therefore, results from these operating segments are presented in “Other.”

Net sales presented in Other in the tables below relate to the sale of products within these non-reportable operating segments, including our recently acquired interior and construction products operating segment beginning in the third quarter of fiscal 2025. Roofing and related products accounted for approximately 50% and 57% of net sales in Other during the three and nine months ended November 2, 2025, respectively, and approximately 68% and 67% during the three and nine months ended October 27, 2024, respectively.

Segment Information. Assets are reviewed by our CODM on a total company consolidated basis and not by segment. The accounting policies of our Primary segment are the same as those described in our summary of significant accounting policies.


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The following table presents net sales, significant expenses, and operating income for our Primary segment:


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Net sales	$	37,462	$	37,289	$	116,906	$	115,608
Cost of sales	24,443		24,532		76,555		76,283


Selling, general and administrative	7,134		6,846		21,673		20,493
Depreciation and amortization	697		693		2,090		2,073

Operating income	$	5,188	$	5,218	$	16,588	$	16,759

The following tables present a reconciliation of certain segment information to our consolidated totals:


	Three Months Ended						Nine Months Ended
	November 2, 2025						November 2, 2025
in millions	Primary		Other		Consolidated		Primary		Other		Consolidated
Net sales	$	37,462	$	3,890	$	41,352	$	116,906	$	9,579	$	126,485

Operating income	5,188		165		5,353		16,588		453		17,041
Interest income and other, net					(32)						(81)
Interest expense					628						1,818
Earnings before provision for income taxes					$	4,757					$	15,304

Depreciation and amortization (1)	$	835	$	195	$	1,030	$	2,504	$	492	$	2,996

—————

(1) Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $52 million and $156 million for the three and nine months ended November 2, 2025, respectively, in our Primary segment, and intangible asset amortization expense of $106 million and $280 million for the three and nine months ended November 2, 2025, respectively, in Other.


	Three Months Ended						Nine Months Ended
	October 27, 2024						October 27, 2024
in millions	Primary		Other		Consolidated		Primary		Other		Consolidated
Net sales	$	37,289	$	2,928	$	40,217	$	115,608	$	4,202	$	119,810

Operating income	5,218		200		5,418		16,759		272		17,031
Interest income and other, net					(30)						(171)
Interest expense					625						1,683
Earnings before provision for income taxes					$	4,823					$	15,519

Depreciation and amortization (1)	$	839	$	140	$	979	$	2,500	$	207	$	2,707

—————

(1) Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $52 million and $155 million for the three and nine months ended October 27, 2024, respectively, in our Primary segment, and intangible asset amortization expense of $86 million and $125 million for the three and nine months ended October 27, 2024, respectively, in Other.

Net Sales

The following table presents our Primary segment major product lines and the related merchandising departments (and related services):


Major Product Line						Merchandising Departments
Building Materials						Building Materials, Electrical, Lumber, Millwork, and Plumbing
Décor						Appliances, Bath, Flooring, Kitchen & Blinds, Lighting, and Paint
Hardlines						Hardware, Indoor Garden, Outdoor Garden, Power, and Storage & Organization


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The following table presents net sales by major product line (and related services) within our Primary segment, as well as Other net sales:


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Building Materials	$	13,596	$	13,531	$	40,699	$	40,115
Décor	12,938		12,831		39,273		39,118
Hardlines	10,928		10,927		36,934		36,375
Primary segment net sales	37,462		37,289		116,906		115,608
Other net sales (1)	3,890		2,928		9,579		4,202
Net sales	$	41,352	$	40,217	$	126,485	$	119,810

—————

(1) See above for further discussion of Other net sales.

Note: As disclosed in our Quarterly Report on Form 10-Q for the first quarter of fiscal 2025, we made changes that realigned certain product categories across our merchandising departments and major product lines within our Primary segment. As a result, prior-year amounts have been updated to conform with the current-year presentation. These changes had no impact on our consolidated net sales.

The following table presents net sales, classified by geography:


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Net sales – in the U.S.	$	38,126	$	37,135	$	117,079	$	110,217
Net sales – outside the U.S.	3,226		3,082		9,406		9,593
Net sales	$	41,352	$	40,217	$	126,485	$	119,810

The following table presents net sales by products and services:


	Three Months Ended				Nine Months Ended
in millions	November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Net sales – products	$	39,874	$	38,692	$	122,111	$	115,375
Net sales – services	1,478		1,525		4,374		4,435
Net sales	$	41,352	$	40,217	$	126,485	$	119,810

Deferred Revenue

For products and services sold in stores or online, payment is typically due at the point of sale. When we receive payment before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete. Such performance obligations are part of contracts with expected original durations of typically three months or less. As of both November 2, 2025 and February 2, 2025, deferred revenue for products and services was $1.5 billion.

We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance. As of November 2, 2025 and February 2, 2025, our performance obligations for unredeemed gift cards were $1.0 billion and $1.1 billion, respectively. Gift card breakage income, which is our estimate of the portion of our outstanding gift card balance not expected to be redeemed, is recognized in net sales and was immaterial during the three and nine months ended November 2, 2025 and October 27, 2024.


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**3.**PROPERTY AND LEASES

Net Property and Equipment

Net property and equipment included accumulated depreciation and finance lease amortization of $31.3 billion as of November 2, 2025 and $29.1 billion as of February 2, 2025.

Leases

The following table presents certain consolidated balance sheet information related to operating and finance leases:


in millions	Consolidated Balance Sheet Classification	November 2, 2025		February 2, 2025
Assets:
Operating lease assets	Operating lease right-of-use assets	$	9,041	$	8,592
Finance lease assets (1)	Net property and equipment	2,617		2,638
Total lease assets		$	11,658	$	11,230
Liabilities:
Current:
Operating lease liabilities	Current operating lease liabilities	$	1,417	$	1,274
Finance lease liabilities	Current installments of long-term debt	296		272
Long-term:
Operating lease liabilities	Long-term operating lease liabilities	7,986		7,633
Finance lease liabilities	Long-term debt, excluding current installments	2,707		2,749
Total lease liabilities		$	12,406	$	11,928

—————

(1) Finance lease assets are recorded net of accumulated amortization of $1.5 billion as of November 2, 2025 and $1.4 billion as of February 2, 2025.

The following table presents supplemental non-cash information related to leases:


	Nine Months Ended
in millions	November 2, 2025		October 27, 2024
Lease assets obtained in exchange for new operating lease liabilities	$	1,223	$	934
Lease assets obtained in exchange for new finance lease liabilities	216		120

**4.**GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents the changes in the carrying amount of our goodwill:


in millions	Primary		Other (3)		Consolidated
Goodwill, balance at February 2, 2025	$	8,450	$	11,025	$	19,475
Acquisitions (1)	62		2,714		2,776

Other (2)	18		(2)		16
Goodwill, balance at November 2, 2025	$	8,530	$	13,737	$	22,267

—————

(1) Activity includes the preliminary determination of goodwill related to the GMS acquisition and other immaterial acquisitions completed during the nine months ended November 2, 2025. See Note 10 for details regarding the GMS acquisition.

(2) Primarily reflects the net impact of foreign currency translation as well as immaterial measurement period adjustments related to acquisitions completed in the prior fiscal year.

(3) Amounts presented in the Other column represent goodwill activity within our non-reportable operating segments.


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During the third quarter of fiscal 2025, we completed our annual assessment of the recoverability of goodwill for our U.S., Canada, and Mexico reporting units that reside within our Primary segment. As the results of our most recent quantitative analysis in fiscal 2023 indicated that the fair value of each reporting unit substantially exceeded its respective carrying amount, we performed a qualitative assessment to determine if there were any indicators of impairment. Based on this assessment, we concluded that while there have been events and circumstances that have both positively and negatively impacted our reporting units, no single factor or combination of factors is an indicator that it is more likely than not that the fair value of any of these reporting units was less than its carrying amount.

We also completed our annual assessment of our SRS roofing and building products, landscape, and pool reporting units using a quantitative approach. The quantitative test for goodwill impairment was performed by determining the fair value of each reporting unit using a combination of discounted cash flow and market-based approaches. The results of our quantitative analysis indicated that the fair value of each reporting unit exceeded its respective carrying amount, including goodwill. Additionally, due to the proximity of the GMS acquisition date to our annual impairment assessment date, we concluded that there were no events or circumstances that would indicate that it is more likely than not that the fair value of the goodwill recognized in the acquisition was less than its carrying amount.

Intangible Assets

The following table presents information regarding our intangible assets:


	November 2, 2025						February 2, 2025
in millions	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-Lived Intangible Assets:
Customer relationships	$	10,447	$	(1,398)	$	9,049	$	8,845	$	(1,035)	$	7,810
Trade names	877		(159)		718		610		(86)		524
Other	11		(11)		—		11		(11)		—
Indefinite-Lived Intangible Assets:
Trade names	649				649		649				649
Total Intangible Assets	$	11,984	$	(1,568)	$	10,416	$	10,115	$	(1,132)	$	8,983

Our intangible asset amortization expense was $158 million and $138 million during the third quarter of fiscal 2025 and fiscal 2024, respectively, and $436 million and $280 million during the first nine months of fiscal 2025 and fiscal 2024, respectively.

The following table presents the estimated future amortization expense related to definite-lived intangible assets as of November 2, 2025:


in millions	Amortization Expense
Fiscal 2025 - remaining	$	169
Fiscal 2026	677
Fiscal 2027	667
Fiscal 2028	650
Fiscal 2029	611
Thereafter	6,993
Total	$	9,767

During the third quarter of fiscal 2025, we completed our annual assessment of the recoverability of our indefinite-lived intangible assets based on quantitative factors and concluded that no impairment losses should be recognized.


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**5.**DEBT AND DERIVATIVE INSTRUMENTS

Short-Term Debt

At the beginning of fiscal 2025, we had a commercial paper program that allowed for an aggregate of $7.0 billion in borrowings, and was supported by $7.0 billion of back-up credit facilities. These backup credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in July 2027, a 364-day $2.0 billion credit facility scheduled to expire in May 2025, and a 364-day $1.5 billion credit facility scheduled to expire in July 2025.

In May 2025, we terminated all three back-up credit facility agreements and simultaneously entered into a new five-year $3.5 billion credit facility scheduled to expire in May 2030 and a new 364-day $3.5 billion credit facility scheduled to expire in May 2026.

In July 2025, we increased our commercial paper program by $4.0 billion in connection with the anticipated financing of the GMS acquisition (see Note 10). In July 2025, in connection with the increase in the commercial paper program, we also entered into a new three-year $3.0 billion back-up credit facility scheduled to expire in July 2028, and a new 364-day $1.0 billion back-up credit facility scheduled to expire in July 2026, as well as amended and restated our existing 364-day $3.5 billion credit facility to extend the maturity from May 2026 to July 2026. In the aggregate, as of November 2, 2025, our commercial paper program allows for borrowings up to $11.0 billion and is supported by $11.0 billion of back-up credit facilities.

During the first nine months of fiscal 2025, all of our short term borrowings were under our commercial paper program, and the maximum amount outstanding during that period was $4.3 billion. At November 2, 2025, we had $3.2 billion of outstanding borrowings under our commercial paper program with a weighted average interest rate of 4.2% and no outstanding borrowings under our back-up credit facilities. At February 2, 2025, we had $316 million of outstanding borrowings under our commercial paper program with a weighted-average interest rate of 4.4% and no outstanding borrowings under our back-up credit facilities.

Long-Term Debt

September 2025 Issuance. In September 2025, we issued three tranches of senior notes.

The first tranche consisted of $500 million of 3.75% senior notes due September 15, 2028 (the “2028 notes”) at a discount of $0.3 million. Interest on the 2028 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.
The second tranche consisted of $500 million of 3.95% senior notes due September 15, 2030 (the “2030 notes”) at a discount of $1.8 million. Interest on the 2030 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.
The third tranche consisted of $1.0 billion of 4.65% senior notes due September 15, 2035 (the “2035 notes”) at a discount of $3.1 million. Interest on the 2035 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.
Issuance costs for the September 2025 issuance totaled $10 million.

Redemption. Each of these senior notes may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued and unpaid interest up to the redemption date. Prior to the relevant Par Call Date, as defined in the respective notes, the redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date. On or after the relevant Par Call Date, the redemption price is equal to 100% of the principal amount of such notes.

The indenture governing these notes does not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indenture governing these notes contains various covenants, none of which are expected to impact our liquidity or capital resources.

Repayments**.** In September 2025, we repaid our $1.0 billion 3.35% and $750 million 4.00% senior notes at maturity. In April 2025, we repaid our $500 million 2.70% and $500 million 5.125% senior notes at maturity.

Derivative Instruments and Hedging Activities

We use derivative instruments as part of our normal business operations in the management of our exposure to fluctuations in foreign currency exchange rates and interest rates on certain debt. Our objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and to minimize the risk of changes in the fair value of certain senior notes.


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We had outstanding interest rate swap agreements with combined notional amounts of $5.4 billion at both November 2, 2025 and February 2, 2025. These agreements are accounted for as fair value hedges that swap fixed for variable rate interest to hedge changes in the fair values of certain senior notes. At November 2, 2025 and February 2, 2025, the fair values of these agreements totaled $565 million and $795 million, respectively, all of which are recognized in other long-term liabilities on our consolidated balance sheets. All of our interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under GAAP. Accordingly, the changes in the fair values of these agreements offset the changes in the fair value of the hedged long-term debt. At November 2, 2025 and February 2, 2025, the carrying amount of our long-term debt, excluding current installments, subject to fair value hedges was $14.6 billion and $14.3 billion, respectively.

During the three and nine months ended November 2, 2025, there was no new material hedging activity or material change to any other hedging arrangement disclosed in our 2024 Form 10-K, and all related activity was immaterial for the periods presented within this report.

Collateral. We generally enter into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit our credit risk, we enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain derivative instruments exceeds or falls below contractually established thresholds. The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $444 million and $668 million as of November 2, 2025 and February 2, 2025, respectively, which was recorded in other current assets on our consolidated balance sheets. We did not hold any cash collateral as of November 2, 2025 or February 2, 2025.

**6.**STOCKHOLDERS' EQUITY

Stock Rollforward

The following table presents a reconciliation of the number of shares of our common stock outstanding and cash dividends per share:


shares in millions	Three Months Ended						Nine Months Ended
November 2, 2025			October 27, 2024			November 2, 2025			October 27, 2024
Common stock:
Shares at beginning of period	1,801			1,799			1,800			1,796
Shares issued under employee stock plans, net	—			—			1			3
Shares at end of period	1,801			1,799			1,801			1,799
Treasury stock:
Shares at beginning of period	(806)			(806)			(806)			(804)
Repurchases of common stock	—			—			—			(2)
Shares at end of period	(806)			(806)			(806)			(806)
Shares outstanding at end of period	995			993			995			993

Cash dividends per share	$	2.30		$	2.25		$	6.90		$	6.75

Share Repurchases

In August 2023, our Board of Directors approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of November 2, 2025, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available. In March 2024, we paused share repurchases and have not resumed share repurchase activity as of November 2, 2025.


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**7.**FAIR VALUE MEASUREMENTS

The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

Level 1: observable inputs such as quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices in active markets in Level 1 that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring management judgment to develop the Company’s own models with estimates and assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:


	November 2, 2025		February 2, 2025
in millions	Fair Value (Level 2)		Fair Value (Level 2)
Derivative agreements – assets	$	—	$	—
Derivative agreements – liabilities	(565)		(795)
Total	$	(565)	$	(795)

The fair values of our derivative instruments are determined using an income approach and Level 2 inputs, which primarily include the respective interest rate forward curves and discount rates. Our derivative instruments are discussed further in Note 5.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Long-lived assets, goodwill, and other intangible assets are subject to nonrecurring fair value measurement for the assessment of impairment.

We did not have any material assets or liabilities that were measured and recognized at fair value on a nonrecurring basis during the three and nine months ended November 2, 2025 or October 27, 2024. See Note 10 for discussion on the fair values of assets acquired and liabilities assumed in the GMS acquisition.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, receivables, accounts payable, short-term debt, and other long-term debt approximate fair value.

The following table presents the aggregate fair values and carrying amounts of our senior notes:


	November 2, 2025				February 2, 2025
in millions	Fair Value (Level 1)		Carrying Amount		Fair Value (Level 1)		Carrying Amount
Senior notes	$	47,489	$	49,229	$	45,499	$	49,731


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**8.**WEIGHTED AVERAGE COMMON SHARES

The following table presents the reconciliation of our basic to diluted weighted average common shares as well as the number of anti-dilutive securities excluded from diluted weighted average common shares:


in millions	Three Months Ended				Nine Months Ended
November 2, 2025		October 27, 2024		November 2, 2025		October 27, 2024
Basic weighted average common shares	993		991		992		990
Effect of potentially dilutive securities (1)	2		2		2		2
Diluted weighted average common shares	995		993		994		992

Anti-dilutive securities excluded from diluted weighted average common shares	—		1		—		1

—————

(1) Represents the dilutive impact of stock-based awards.

**9.**CONTINGENCIES

We are involved in litigation arising in the normal course of business. In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

**10.**ACQUISITIONS

SRS Acquisition

On June 18, 2024, we completed the acquisition of SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor, for total purchase consideration of $18.0 billion. We primarily used a combination of proceeds from commercial paper borrowings, the issuance of long-term debt, as well as cash on hand to fund the acquisition. In fiscal 2024, we recorded a preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated acquisition date fair values. Measurement period adjustments recognized in fiscal 2025 were immaterial, and we finalized our purchase price allocation during the first quarter of fiscal 2025.

GMS Acquisition

On June 29, 2025, we entered into a definitive agreement to acquire GMS, a leading distributor of specialty building products including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. Under the terms of the merger agreement, we, through a wholly owned subsidiary, made a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share. All conditions of the offer were satisfied, including receipt of the requisite regulatory approvals, and the merger was completed on September 4, 2025. As a result of the merger, GMS became a direct subsidiary of SRS and an indirect, wholly owned subsidiary of the Company. We believe the GMS acquisition will enhance SRS's position as a leading multi-category building materials distributor, bringing differentiated capabilities, product categories and customer relationships that are highly complementary to SRS's existing business.

Cash consideration remitted by the Company for the purchase of all outstanding shares of GMS common stock totaled approximately $4.3 billion, and we also repaid approximately $1.2 billion of certain GMS outstanding debt concurrent with the completion of the merger. The merger consideration and repayment of GMS debt was funded through a combination of cash on hand and approximately $2.0 billion of borrowings under our commercial paper program, which were refinanced with the issuance of $2.0 billion of long-term debt in September 2025 (see Note 5).

The acquisition was accounted for in accordance with Accounting Standards Codification Topic 805: “Business Combinations” and GMS’s results of operations have been consolidated in the Company’s financial statements effective September 4, 2025. Acquisition-related costs were expensed as incurred and were not material.


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Fair Value of Consideration Transferred. The following table summarizes total purchase consideration:


in millions
Cash consideration for outstanding shares	$	4,257
Repayment of GMS outstanding debt (1)	824

Total purchase consideration	$	5,081

—————

(1) Represents the repayment of certain GMS long-term debt which was required to be repaid upon a change in control. As further discussed below, an additional $354 million of GMS long-term debt was also repaid upon completion of the merger and has been reflected as an assumed liability upon consummation of the transaction.

Allocation of Consideration Transferred. We recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of September 4, 2025. The following table summarizes our preliminary purchase price allocation, including resulting goodwill:


in millions	Preliminary Fair Value
Cash and cash equivalents	$	136
Receivables	889
Merchandise inventories	568
Property and equipment	715
Goodwill	2,611
Intangible assets	1,800
Other current and non-current assets	388
Total assets acquired	$	7,107

Accounts payable	$	381
Other current liabilities	390
Senior notes (1)	354
Deferred income taxes (2)	403
Other long-term liabilities	498
Total liabilities assumed	$	2,026
Net assets acquired	$	5,081

—————

(1) Represents GMS senior notes that were redeemed by the Company upon completion of the merger. As the repayment was made at the discretion of the Company, the senior notes are reflected as an assumed liability upon consummation of the transaction with the corresponding long-term debt repayment presented within financing activities on our consolidated statement of cash flows.

(2) Primarily resulting from the difference in book and tax basis related to identifiable intangible assets.

The preliminary fair values of identifiable intangible assets were determined by using certain estimates and assumptions that are not observable in the market. The Company used the multi-period excess earnings method to value the customer relationships intangible assets. The significant assumptions used to estimate the fair value of customer relationships included forecasted revenues, customer attrition rates, and the discount rate. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives. The preliminary fair value and estimated useful lives of identifiable intangible assets are as follows:


in millions	Weighted Average Useful Life (Years)	Preliminary Fair Value
Customer relationships	19	$	1,540
Trade names	7	260
Total identifiable intangible assets		$	1,800


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The goodwill arising from the acquisition is calculated as the excess of the purchase price over the net assets acquired and is attributable to anticipated (i) growth acceleration in the residential and commercial professional customer (“Pro”) market; (ii) expanded capabilities and product categories; (iii) additional addressable market opportunities; (iv) enhanced delivery network capabilities; and (v) growth in sales force. We expect approximately $214 million of goodwill related to the acquisition to be deductible for U.S. federal and state income tax purposes. As the valuation is preliminary, we have not yet finalized the assignment of goodwill to our reporting units, and no goodwill related to the GMS acquisition currently resides in our Primary segment.

We have completed preliminary valuation analyses necessary to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. These fair values were based on management’s estimates and assumptions; however, the amounts indicated above are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. Accordingly, there may be adjustments to the assigned values of acquired assets and liabilities. The primary areas that remain preliminary include, but are not limited to, intangible assets, including the preliminary assumptions used in their estimates of fair values and their respective estimated useful lives, the valuation of certain tangible assets, income taxes, and residual goodwill. The final determination of the fair values, related income tax impacts, and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined.

Results of Operations. Net sales attributable to GMS since the completion of the acquisition and included within our results of operations for both the three and nine months ended November 2, 2025 totaled $892 million. Net earnings attributable to GMS since the completion of the acquisition and included within our results of operations for both the three and nine months ended November 2, 2025 were immaterial.

Pro forma results of operations are not presented as the effect of the acquisition was not material to our financial results.

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