Earnings Reports (Feb 19th-23rd)
Taking a Look at Earnings Reports for Home Depot (HD) and Global-E (GLBE).
1. Home Depot (HD)
On Tuesday, The Home Depot, the world's leading home improvement retailer, announced its financial results for the Q4 2023 and the full fiscal year of 2023. Despite a slight decrease in sales and net earnings compared to the previous fiscal year, the company did increase their quarterly dividend by 7.7% and provided positive guidance for fiscal 2024. The company did say they remain committed to strategic investments aimed at enhancing customer experience and expanding market share in a competitive and fragmented market.
Fiscal 2023 Highlights
Q4 Performance:
Sales: Fourth quarter sales amounted to $34.8B, marking a decrease of 2.9% from the fourth quarter of fiscal 2022.
Comparable Sales: Saw a decline of 3.5% overall, with a more pronounced decrease of 4% in the U.S.
Net Earnings: Reached $2.8B, or $2.82 per diluted share, a 14.5% decrease in earnings per share compared to the same period last year.
Annual Overview
Annual Sales: Totaled $152.7B, a 3% decrease from fiscal 2022.
Comparable Sales: Dropped by 3.2% overall, with a 3.5% decrease in the U.S.
Net Earnings: The company reported $15.1B in net earnings, or $15.11 per diluted share, representing a 9.5% decrease in diluted earnings per share from fiscal 2022.
Management's Commentary
Ted Decker, Chair, President, and CEO, commented on the year's performance, highlighting a period of moderation following three years of significant growth (which I’ve also emphasized in previous articles).
The company is focused on strengthening its business core, enhancing interconnected customer experiences, expanding professional customer engagement, and growing its physical footprint.
HD remains optimistic about the home improvement sector's prospects and its position in a market estimated to exceed $950B.
Dividend Declaration
The Board of Directors approved a 7.7% increase in the quarterly dividend to $2.25 per share, equating to an annual rate of $9.00 per share.
This marks the 148th consecutive quarter of cash dividends, underscoring the company's commitment to shareholder returns.
Fiscal 2024 Guidance
Sales Growth: Anticipated at around 1%, including the impact of an additional operating week.
Comparable Sales: Expected to decline by approximately 1% over the 52-week period.
New Stores: Plans to open approximately 12 new stores.
Financial Metrics: Targets include a gross margin of 33.9%, an operating margin of 14.1%, and a tax rate of 24.5%.
Net Interest Expense: Projected at approximately $1.8 billion.
Earnings Growth: Diluted earnings-per-share growth is forecasted at about 1%, with the 53rd week contributing approximately $0.30 to diluted earnings per share.
My Take
HD's fiscal 2023 performance showcases the reality of navigating a market that's moderating after years of remarkable growth, further complicated by the pressures of a high inflationary environment. Nonetheless, the company's strategic measures and its cautiously optimistic outlook for 2024 reflect a strong sense of confidence in its capacity to adapt and thrive. This really excites me. Despite the challenges, my satisfaction with HD's performance remains unshaken. My conviction in the company's potential is strong, ensuring its continued place as a cornerstone in my portfolio.
2. Global-e (GLBE)
Global-e (GLBE), a frontrunner in direct-to-consumer cross-border e-commerce enablement, recently announced its financial results for both the Q4 2023 and the entirety of the year, alongside projections for Q1 and full year of 2024.
Q4 2023 Performance
GMV: Reached $1.19B, marking a 42% increase YoY.
Revenue: Grew to $185.4M, up 33% YoY, with service fees revenue at $89.9M and fulfillment services revenue at $95.5M.
Non-GAAP Gross Profit: Rose to $79.1M, a 37% increase YoY, while GAAP gross profit was $76.3M.
Gross Margin: Non-GAAP gross margin improved to 42.7%, up from 41.3% in the previous year, with GAAP gross margin at 41.2%.
Adjusted EBITDA: Increased to $35.2M from $21.8M in Q4 2022, a 62% increase YoY.
Net Loss: Reported at $22.1M.
FY 2023 Financial Overview
GMV: Grew to $3.56B, a 45% increase YoY.
Revenue: Rose to $569.9M, up 39% YoY, with service fees contributing $262.2M and fulfillment services $307.7M.
Non-GAAP Gross Profit: Increased to $244.8M, up 46% YoY, with GAAP gross profit at $233.6M.
Gross Margin: Improved Non-GAAP gross margin to 42.9%, a gain of 190 basis points over the previous year, and GAAP gross margin at 41.0%.
Adjusted EBITDA: Jumped to $92.7M, a 90% increase from $48.7M in 2022.
Net Loss: Totaled $133.8M for the year.
Highlights
GLBE maintained a high annual GDR rate of over 97% and an NDR rate of 127%, indicating strong retention and growth within its merchant base.
Expanded its brand partnerships across various geographies and sectors, including notable additions like Glossier and EleVen by Venus Williams in the US, and Mugler in France.
Enhanced merchant engagement and operational scope, including significant collaborations with brands like adidas and Kylie Jenner’s new venture, KHY.
Launched an automated Customer Service Chatbot using Open-AI’s ChatGPT technology, significantly easing the customer service workload during peak trading times.
Continued strategic partnership with Shopify, including the migration to a new native integration and the adoption of Shopify Markets Pro in the US.
Q1 2024 and Full Year Outlook
GLBE is setting forth an optimistic guidance for both the first quarter and the full year of 2024:
Q1 2024 GMV: Projected between $875M to $915M.
FY 2024 GMV: Estimated to range from $4.59B to $4.83B
Q1 2024 Revenue: Expected to be between $138.5M to $145M.
FY 2024 Revenue: Anticipated to be between $731M to $771M.
Adjusted EBITDA: For Q1 2024, projected between $16M to $20M, and for FY 2024, forecasted to be between $121M to $137M.
Amir Schlachet, the CEO, expressed satisfaction with the company's historic fourth-quarter and annual results, highlighting a remarkable 45% annual growth in Gross Merchandise Value (GMV), a 39% increase in revenues, and an impressive 90% surge in Adjusted EBITDA. Notably, the company surpassed $1B GMV in a single quarter for the first time. Schlachet also emphasized the company's success in expanding its client base across numerous geographies and making significant strides in its strategic initiatives. Despite the volatility in consumer sentiment throughout 2023 and the ongoing uncertainties in macroeconomic conditions, GLBE's outlook remains highly optimistic, with a strong belief in sustained, profitable growth in the years ahead.
My Take
The recent quarter for GLBE didn't strike me as disappointing, despite the market's less favorable reaction. The results, though mixed to some, appeared to be healthy in my view. A critical indicator for GLBE, among others, is the Gross Merchandise Value (GMV). A significant downturn in GMV would have raised more concern for me. However, their forward-looking statements reinforce my belief in the company's strategic path and its capability to steer through market volatilities. Consequently, GLBE will maintain its place in my portfolio, with my conviction strong. Should the downtrend persist, I might consider reinforcing my stake, viewing any further declines as potential opportunities.