Lowe's 10-Q 2022-04-29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2022

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-7898

LOWE’S COMPANIES, INC.

(Exact name of registrant as specified in its charter)

North Carolina						56-0578072
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
1000 Lowes Blvd., Mooresville, North Carolina						28117
(Address of principal executive offices)						(Zip Code)
Registrant’s telephone number, including area code:						(704) 758-1000
Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.50 per share			LOW			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

CLASS						OUTSTANDING AT 5/24/2022
Common Stock, $0.50 par value						639,128,830

LOWE’S COMPANIES, INC.

- TABLE OF CONTENTS -

									Page No.
Forward-Looking Statements									ii
PART I - Financial Information									1
			Item 1.			Financial Statements			1
						Consolidated Statements of Earnings			1
						Consolidated Statements of Comprehensive Income			1
						Consolidated Balance Sheets			2
						Consolidated Statements of Shareholders’ (Deficit)/Equity			3
						Consolidated Statements of Cash Flows			4
						Notes to Consolidated Financial Statements			5
						Note 1: Summary of Significant Accounting Policies			5
						Note 2: Revenue			5
						Note 3: Restricted Investments			6
						Note 4: Fair Value Measurements			7
						Note 5: Debt			8
						Note 6: Derivative Instruments			9
						Note 7: Shareholders’ (Deficit)/Equity			9
						Note 8: Earnings Per Share			10
						Note 9: Supplemental Disclosure			11
						Report of Independent Registered Public Accounting Firm			12
			Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
			Item 3.			Quantitative and Qualitative Disclosures about Market Risk			18
			Item 4.			Controls and Procedures			19
PART II - Other Information									20
			Item 1.			Legal Proceedings			20
			Item 1A.			Risk Factors			20
			Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			20
			Item 6.			Exhibits			21
						Signature			22

						i

FORWARD-LOOKING STATEMENTS

This Form 10-Q 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, business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services, share repurchases, 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, 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, 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” and “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in our most recent Annual Report on Form 10-K and as may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. 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.

						ii

Part I - FINANCIAL INFORMATION

Lowe’s Companies, Inc.

Consolidated Statements of Earnings (Unaudited)

In Millions, Except Per Share and Percentage Data

			Three Months Ended
			April 29, 2022												April 30, 2021
Current Earnings			Amount						% Sales						Amount						% Sales
Net sales			$	23,659					100.00		%				$	24,422					100.00		%
Cost of sales			15,609						65.97						16,292						66.71
Gross margin			8,050						34.03						8,130						33.29
Expenses:
Selling, general and administrative			4,303						18.19						4,494						18.40
Depreciation and amortization			445						1.88						391						1.60
Operating income			3,302						13.96						3,245						13.29
Interest – net			243						1.03						211						0.87
Pre-tax earnings			3,059						12.93						3,034						12.42
Income tax provision			726						3.07						713						2.92
Net earnings			$	2,333					9.86		%				$	2,321					9.50		%
Weighted average common shares outstanding – basic			660												718
Basic earnings per common share			$	3.52											$	3.22
Weighted average common shares outstanding – diluted			662												720
Diluted earnings per common share			$	3.51											$	3.21

See accompanying notes to the consolidated financial statements (unaudited).

Lowe’s Companies, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

In Millions, Except Percentage Data

			Three Months Ended
			April 29, 2022												April 30, 2021
			Amount						% Sales						Amount						% Sales
Net earnings			$	2,333					9.86		%				$	2,321					9.50		%
Foreign currency translation adjustments – net of tax			(17)						(0.07)						102						0.41
Cash flow hedges – net of tax			219						0.93						24						0.10
Other			(2)						(0.01)						(1)						—
Other comprehensive income			200						**0.

Showing the first 8K of 68K characters. Open the full section

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity and capital resources during the three months ended April 29, 2022, and April 30, 2021. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2022 (the Annual Report), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of 2021. This discussion and analysis is presented in four sections:

• Executive Overview

• Operations

• Financial Condition, Liquidity and Capital Resources

• Critical Accounting Policies and Estimates

EXECUTIVE OVERVIEW

Net sales in the first quarter of 2022 decreased 3.1% to $23.7 billion compared to net sales of $24.4 billion in the first quarter of 2021. The decrease in total sales was driven by a decrease in comparable sales. Net earnings in the first quarter of 2022 were $2.3 billion, which represents an increase of 0.5% compared to the first quarter of 2021. Diluted earnings per common share increased 9.4% to $3.51 in the first quarter of 2022 from $3.21 in the first quarter of 2021.

For the first three months of 2022, cash flows from operating activities were approximately $3.0 billion, while $343 million was used for capital expenditures. Continuing to deliver on our commitment to return excess cash to shareholders, we repurchased $4.1 billion of common stock and paid $537 million in dividends during the three months ended April 29, 2022.

During the first quarter of 2022, comparable sales declined 4.0% with seven of 15 product categories generating positive comparable sales during the quarter. In the first quarter, our spring-related outdoor categories were unfavorably impacted by a delayed spring selling season across all regions, which was most pronounced in the North, due to unseasonably cold and wet weather. However, we continued to experience strong results with our Pro customers, particularly in our Building Products categories, due to our improved Pro product and service offerings, as well as strong market demand. In addition, DIY demand remains solid for core, non-seasonal home improvement projects. Despite the delay in spring, the operational efficiencies gained through our Perpetual Productivity Improvement (PPI) initiatives, such as our enhanced labor management tools and improved pricing capabilities, have given us the agility to deliver operating margin improvement even when sales decline.

This quarter, we launched our new Pro Loyalty program, MVPs Pro Rewards and Partnership ProgramTM, which is centered around creating a partnership with our Pro customers. We are excited about the loyalty and credit offerings our MVPs program provides, and we look forward to building on the momentum of the program as we launch enhanced features in the coming months. In addition, during the quarter, we converted our fourth geographic area to our market-based delivery model for big and bulky product. In this model, product flows directly to customer homes from our distribution network, bypassing stores altogether.

We view spring as a first half event, and we are encouraged by the arrival of spring across our regions at the close of the first quarter. As part of our Total Home strategy, we are ready to capitalize on this demand with our enhanced assortment, strong inventory position, improved omnichannel fulfillment capabilities, and seasonal staffing in place to serve customers and grow market share.

OPERATIONS

The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of earnings (unaudited), as well as the percentage change in dollar amounts from the prior period. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).

						13

			Three Months Ended												Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period						Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
			April 29, 2022						April 30, 2021						2022 vs. 2021						2022 vs. 2021
Net sales			100.00		%				100.00		%				N/A						(3.1)		%
Gross margin			34.03						33.29						74						(1.0)
Expenses:
Selling, general and administrative			18.19						18.40						(21)						(4.3)
Depreciation and amortization			1.88						1.60						28						13.8
Operating income			13.96						13.29						67						1.8
Interest – net			1.03						0.87						16						15.4
Pre-tax earnings			12.93						12.42						51						0.8
Income tax provision			3.07						2.92						15						1.9
Net earnings			9.86		%				9.50		%				36						0.5		%

The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).

			Three Months Ended
Other Metrics			April 29, 2022						April 30, 2021
Comparable sales (decrease)/increase 1			(4.0)		%				25.9		%
Total customer transactions (in millions)			226						261
Average ticket 2			$	104.52					$	93.74
At end of period:
Number of stores			1,971						1,972
Sales floor square feet (in millions)			208						208
Average store size selling square feet (in thousands) 3			106						105
Net earnings to average debt and shareholders’ (deficit)/equity 4			30.8		%				24.3		%
Return on invested capital 4			33.8		%				29.9		%

1 A comparable location is defined as a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we decide to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Comparable sales are presented on a transacted basis when tender is accepted from a customer. Comparable sales include online sales, which impacted first quarter fiscal 2022 and fiscal 2021 comparable sales by approximately -5 basis points and 310 basis points, respectively. The comparable store sales calculation included in the preceding table was calculated using comparable 13-week periods.

2 Average ticket is defined as net sales divided by the total number of customer transactions.

3 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s-branded home improvement store has approximately 112,000 square feet of retail selling space.

4 Return on invested capital is calculated using a non-GAAP financial measure. Net earnings to average debt and shareholders’ (deficit)/equity is the most comparable GAAP ratio. See below for additional information and reconciliations of non-GAAP measures.

Non-GAAP Financial Measures

						14

Return on Invested Capital

Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate profits. 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:

			For the Periods Ended
(In millions, except percentage data)			April 29, 2022						April 30, 2021
Calculation of Return on Invested Capital
Numerator
Net Earnings			$	8,453					$	6,819
Plus:
Interest expense – net			918						855
Loss on extinguishment of debt			—						1,060
Operating lease interest			158						168
Provision for income taxes			2,780						2,167
Lease adjusted net operating profit			12,309						11,069
Less:
Income tax adjustment 1			3,046						2,670
Lease adjusted net operating profit after tax			$	9,263					$	8,399
Denominator
Average debt and shareholders’ (deficit)/equity 2			$	27,442					$	28,053
Net earnings to average debt and shareholders’ (deficit)/equity			30.8		%				24.3		%
Return on invested capital			33.8		%				29.9		%

1 Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax rate, which was 24.7% and 24.1% for the periods ended April 29, 2022, and April 30, 2021, respectively.

2 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.

Results of Operations

Net Sales – Net sales for the first quarter of 2022 decreased 3.1% to $23.7 billion. The decrease in total sales was driven by a decline in comparable sales. Comparable sales decreased 4.0% over the same period, driven by a 13.1% decrease in comparable customer transactions, partially offset by a 9.1% increase in comparable average ticket.

During the first quarter of 2022, we experienced comparable sales increases in seven of 15 product categories, led by Electrical, Building Materials, and Rough Plumbing. Strength in these categories reflects robust Pro customer demand, as well as unit price increases due to inflation. Our seasonal categories of Seasonal & Outdoor Living and Lawn & Garden experienced our lowest comparable sales change due to a delayed spring season, with unseasonably cool and wet weather across all regions.

Gross Margin – For the first quarter of 2022, gross margin increased 74 basis points as a percentage of sales. The gross margin increase for the quarter is driven by approximately 50 basis points of total rate improvement due to continued improvements in managing product costs and disciplined pricing strategies, 25 basis points of leverage from higher credit revenue, and 20 basis points of favorable product mix. These favorable impacts were partially offset by 10 basis points of deleverage from damaged live-goods caused by unseasonable weather and 10 basis points of deleverage from distribution costs.

						15

SG&A – For the first quarter of 2022, SG&A expense leveraged 21 basis points as a percentage of sales compared to the first quarter of 2021. This is primarily driven by improved labor productivity, partially offset by lower fixed cost leverage and wage pressure.

Depreciation and Amortization – Depreciation and amortization deleveraged 28 basis points for the first quarter of 2022 compared to the prior year primarily due to ongoing capital investments in technology, store environment, and store equipment. Property, less accumulated depreciation, decreased to $18.9 billion at April 29, 2022, compared to $19.1 billion at April 30, 2021.

Interest – Net – Interest expense for the first quarter of 2022 deleveraged 16 basis points as a percentage of sales, primarily due to interest expense related to the issuance of unsecured notes in March 2021, September 2021, and March 2022, partially offset by scheduled payoff of notes at maturity.

Income Tax Provision – Our effective income tax rates were 23.7% and 23.5% for the three months ended April 29, 2022 and April 30, 2021, respectively.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Cash flows from operations, combined with our continued access to capital markets on both a short-term and long term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, and return excess cash to shareholders in the form of dividends and share repurchases. We believe these sources of liquidity will continue to support our business for the next twelve months. As of April 29, 2022, we held $3.4 billion of cash and cash equivalents, as well as $4.0 billion in undrawn capacity on our revolving credit facilities.

Cash Flows Provided by Operating Activities

			Three Months Ended
(In millions)			April 29, 2022						April 30, 2021
Net cash provided by operating activities			$	2,977					$	4,492

Cash flows from operating activities continued to provide the primary source of our liquidity. The decrease in net cash provided by operating activities for the three months ended April 29, 2022, compared to the three months ended April 30, 2021, was driven primarily by changes in working capital. Accounts payable increased by $2.5 billion for the first three months of 2022 compared to an increase of $3.1 billion for the first three months of 2021, driving a net difference in operating cash flows for the quarter of $523 million. Inventory decreased operating cash flows for the first three months of 2022 by approximately $2.6 billion compared to a decrease of approximately $2.1 billion for the first three months of 2021. We typically build our inventory in anticipation for spring as we have historically recognized our highest volume sales during the second fiscal quarter. In the current year, we have experienced a delay in the spring selling season due to unseasonably cool and wet weather which has resulted in elevated inventory levels in our seasonal categories. Other operating liabilities increased $81 million for the first three months of 2022 compared to an increase of $421 million in the first three months of 2021. The decline in cash flows provided by the change in other operating liabilities in the current year compared to the prior year is primarily driven by the payout of discretionary compensation for front-line employees in the first quarter of fiscal 2022.

Cash Flows Used in Investing Activities

			Three Months Ended
(In millions)			April 29, 2022						April 30, 2021
Net cash used in investing activities			$	(310)					$	(477)

Net cash used in investing activities primarily consists of transactions related to capital expenditures.

						16

Capital expenditures

Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. The following table provides our capital expenditures for the three months ended April 29, 2022, and April 30, 2021:

			Three Months Ended
(In millions)			April 29, 2022						April 30, 2021
Core business investments 1			$	252					$	365
Strategic initiatives 2			46						58
New stores, new corporate facilities and international 3			45						38
Total capital expenditures			$	343					$	461

1**Includes merchandising resets, facility repairs, replacements of IT and store equipment, among other specific efforts.

2**Represents investments related to our strategic focus areas aimed at improving customers’ experience and driving improved performance in the near and long term (excluding acquisitions).

3**Represents expenditures primarily related to land purchases, buildings, and personal property for new store projects and new corporate facilities projects, as well as expenditures related to our international operations.

Our fiscal year 2022 outlook for capital expenditures is approximately $2.0 billion.

Cash Flows Used in Financing Activities

			Three Months Ended
(In millions)			April 29, 2022						April 30, 2021
Net cash used in financing activities			$	(386)					$	(2,020)

Net cash used in financing activities primarily consists of transactions related to our share repurchases, long-term debt, and cash dividend payments.

Total Debt

During the three months ended April 29, 2022, we issued $5.0 billion of unsecured notes, the proceeds of which were designated for general corporate purposes. During the three months ended April 29, 2022, we also paid $750 million to retire scheduled debt at maturity.

The 2020 Credit Agreement and the Third Amended and Restated Credit Agreement support our commercial paper program. The amount available to be drawn under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement is reduced by the amount of borrowings under our commercial paper program. There were no outstanding borrowings under the Company’s commercial paper program, the 2020 Credit Agreement, or the Third Amended and Restated Credit Agreement as of April 29, 2022, and April 30, 2021. Total combined availability under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement as of April 29, 2022, was $4.0 billion.

The 2020 Credit Agreement and the Third Amended and Restated Credit Agreement contain customary representations, warranties, and covenants. We were in compliance with those covenants at April 29, 2022.

The following table includes additional information related to our debt for the three months ended April 29, 2022, and April 30, 2021:

			Three Months Ended
(In millions)			April 29, 2022						April 30, 2021
Net proceeds from issuance of debt			$	4,964					$	1,988
Repayment of debt			(773)						(543)
Maximum commercial paper outstanding at any period			1,361						400

						17

Share Repurchases

We have an ongoing share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities. Shares repurchased are retired and returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total cash used to repurchase shares for the three months ended April 29, 2022, and April 30, 2021:

			Three Months Ended
(In millions, except per share data)			April 29, 2022						April 30, 2021
Total amount paid for share repurchases			$	4,037					$	3,038
Total number of shares repurchased			18.7						16.7
Average price paid per share			$	215.32					$	182.20

As of April 29, 2022, we had $15.7 billion remaining available under our share repurchase program with no expiration date. We expect to repurchase shares totaling approximately $12.0 billion in 2022 (including the amount repurchased during the first three months of fiscal year 2022).

Dividends

Dividends are paid in the quarter immediately following the quarter in which they are declared. Dividends paid per share increased from $0.60 per share for the three months ended April 30, 2021, to $0.80 per share for the three months ended April 29, 2022.

Capital Resources

We expect to continue to have access to the capital markets on both a short-term and long-term basis when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of May 26, 2022, which we are disclosing to enhance understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Our debt ratings have enabled, and should continue to enable, us to refinance our debt as it becomes due at favorable rates in capital markets. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

Debt Ratings			S&P			Moody’s
Commercial Paper			A-2			P-2
Senior Debt			BBB+			Baa1
Senior Debt Outlook			Stable			Stable

There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price. In addition, we do not believe it will be necessary to repatriate significant cash and cash equivalents and short-term investments held in foreign affiliates to fund domestic operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 to the consolidated financial statements presented in the Annual Report. Our critical accounting policies and estimates are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Our significant and critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.

The Company is exposed to certain market risks, including changes in foreign currency exchange rates related to our international operations, interest rates, and commodity prices. The Company’s market risks have not changed materially from those disclosed in the Annual Report for the fiscal year ended January 28, 2022.

						18

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s “disclosure controls and procedures,” (as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of April 29, 2022, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

In addition, no change in the Company’s internal control over financial reporting occurred during the quarter ended April 29, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

						19

Part II – OTHER INFORMATION

Item 1. - Legal Proceedings

The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that are subject to certain self-insurance limits.

There have been no material changes in the Company’s risk factors from those disclosed in “Item 1A. Risk Factors” in our Annual Report filed with the SEC on March 21, 2022.

Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information with respect to purchases of the Company’s common stock on a trade date basis made during the three months ended April 29, 2022:

			Total Number of Shares Purchased 1						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2
January 29, 2022 - February 25, 2022			5,246,204						$	222.50					5,244,115						$	18,426,847,833
February 26, 2022 - April 1, 2022			7,301,168						219.70						6,734,197						17,071,951,655
April 2, 2022 - April 29, 2022			6,631,642						202.91						6,628,255						15,726,993,053
As of April 29, 2022			19,179,014						$	214.66					18,606,567						$	15,726,993,053

1**The total number of shares repurchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.

2**On December 15, 2021, the Company announced that its Board of Directors authorized $13.0 billion of share repurchases under the program, in addition to the $15.0 billion of share repurchases authorized by the Board of Directors in December 2020, with no expiration.

3**In February 2022, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase the Company’s common stock. At inception, pursuant to the agreement, the Company paid $750 million to the financial institution and received an initial delivery of 2.8 million shares. In April, prior to the end of the first quarter, the Company finalized the transaction and received an additional 0.6 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note 7 to the consolidated financial statements included herein for additional information regarding share repurchases.

						20

Exhibit Number												Incorporated by Reference
			Exhibit Description						Form						File No.						Exhibit						Filing Date
3.1						Restated Charter of Lowe’s Companies, Inc.						10-Q						001-07898						3.1						September 1, 2009
3.2						Bylaws of Lowe’s Companies, Inc., as amended and restated March 18, 2022.						8-K						001-07898						3.1						March 23, 2022
4.1						Twentieth Supplemental Indenture, dated as of March 24, 2022, between Lowe’s Companies, Inc. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association as successor trustee).						8-K						001-07898						4.2						March 24, 2022
10.1						Offer Letter between Brandon J. Sink and Lowe’s Companies, Inc. entered into on April 8, 2022.*						8-K						001-07898						10.1						April 8, 2022
10.2						Form of Lowe’s Companies, Inc. 2022 Performance Share Unit Award Agreement.*‡
15.1						Deloitte & Touche LLP Letter re Unaudited Interim Financial Information.‡
31.1						Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
31.2						Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
32.1						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101.INS						Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.‡
101.SCH						Inline XBRL Taxonomy Extension Schema Document.‡
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.‡
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.‡
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.‡
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.‡
104						Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).‡
*						Indicates a management contract or compensatory plan or arrangement.
‡						Filed herewith.
†						Furnished herewith.

						21

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						LOWE’S COMPANIES, INC.
						(Registrant)
May 26, 2022						By: /s/ Dan C. Griggs, Jr.
Date						Dan C. Griggs, Jr. Senior Vice President, Tax and Chief Accounting Officer

						22