Q2 2025 Lowes Companies Inc Earnings Call

As Rob and I'll be your operator for today's call.

As a reminder, this conference is being recorded.

I'll now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

Speaker #2: Así ahorras mucho más. ¿Qué esperas? ¡Únete hoy gratis!

Thank you and good morning here with me today are Marvin Ellison, Chairman and Chief Executive Officer, Bill Boltz are executive Vice President merchandising.

Speaker #1: Lowes, nosotros ayudamos. Tú ahorras.

Joe Mcfarland, our executive Vice President stores, and Brandon zinc, our executive Vice President and Chief Financial Officer as noted in our press release. This morning announcing a definitive agreement to acquire F. B M. There are accompanying slides today's comments, which will be referenced on today's call.

Speaker #3: Good morning, everyone. Welcome to today's conference call to discuss Lowe's Company's second-quarter 2025 earnings results and Lowe's agreement to acquire Foundation Building Materials, or FBM.

Rob: Good morning, everyone. Welcome to today's conference call to discuss Lowe's Companies' second quarter 2025 earnings results and Lowe's agreement to acquire Foundation Building Materials, or FBM. My name is Rob, and I'll be your operator for today's call. As a reminder, this conference is being recorded. I'll now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

Speaker #3: My name is Rob, and I'll be your operator for today's call. As a reminder, this conference is being recorded. I'll now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

I would like to remind you that our notices regarding forward looking statements are included in our press releases and presentation that can be found on Lowe's Investor Relations website during.

Speaker #4: Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer; Bill Boltz, our Executive Vice President of Merchandising; Joe McFarland, our Executive Vice President of Stores; and Brandon Sink, our Executive Vice President and Chief Financial Officer.

During this call we will be making comments that are forward looking including our expectations for fiscal 2025 actual results may differ materially from those expressed or implied as a result of various risks uncertainties and important factors, including those discussed in the risk factors MD&A and other sections of our annual report on Form 10-K, and our other SEC filings.

Kate Pearlman: Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer; Bill Boltz, our Executive Vice President, Merchandising; Joe McFarland, our Executive Vice President, Stores; and Brandon Sink, our Executive Vice President and Chief Financial Officer. As noted in our press release this morning announcing the definitive agreement to acquire FBM, there are accompanying slides to today's comments, which will be referenced on today's call. I would like to remind you that our notices regarding forward-looking statements are included in our press releases and presentation that can be found on Lowe's Investor Relations website. During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2025.

Speaker #4: As noted in our press release this morning, announcing the definitive agreement to acquire FBM, there are accompanying slides to today's comments, which will be referenced on today's call.

Additionally, we will be discussing certain non-GAAP financial measures a reconciliation of these items to U S. GAAP can be found on the quarterly earnings section of our Investor Relations website, now I'll turn the call over to Marvin.

Speaker #4: I would like to remind you that our notices regarding forward-looking statements are included in our press releases and presentations that can be found on Lowe's Investor Relations website.

Thank you Katie and good morning, everyone.

Speaker #4: During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2025. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors.

This morning, we announced the acquisition of foundation building materials.

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A premier distributor of interior building products, including dry wall metal framing ceiling systems installation commercial doors in hardware and other complementary products. This.

Kate Pearlman: Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the Risk Factors, MD&A, and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the Quarterly Earnings section of our Investor Relations website. Now, I will turn the call over to Marvin.

Speaker #4: Including those discussed in the risk factors, MD&A, and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures.

This acquisition represents a transformational move when it comes to advancing our total home strategy and enhancing long term shareholder value.

Speaker #4: Our reconciliation of these items to U.S. GAAP can be found in the quarterly earnings section of our Investor Relations website. Now, I’ll turn the call over to Marvin.

With the acquisition of F. B M. We are strategically expanding our offering to serve the large pro especially the planned spin.

Speaker #5: Thank you, Kate. And good morning, everyone. This morning, we announced the acquisition of Foundation Building Materials, or FBM, a premier distributor of interior building products including drywall, metal framing, ceiling systems, insulation, commercial doors, hardware, and other complementary products.

Brandon Sink: Thank you, Kate, and good morning, everyone. This morning, we announced the acquisition of Foundation Building Materials, or FBM, a premier distributor of interior building products, including drywall, metal framing, ceiling systems, insulation, commercial doors, and hardware, and other complementary products. This acquisition represents a transformational move when it comes to advancing our total home strategy and enhancing long-term shareholder value. With the acquisition of FBM, we are strategically expanding our pro offering to serve the large pro, especially their planned spend. We are now well positioned to not only continue driving growth with our core DIY and small to medium pro customers, but this acquisition also unlocks our ability to serve the larger pro within a $250 billion total addressable market.

We're now well positioned to not only continue driving growth, where our core DIY as small to medium pro customers with this acquisition also unlocks our ability to serve the larger pro within a $250 billion total addressable market.

Speaker #5: This acquisition represents a transformational move when it comes to advancing our toll-home strategy and enhancing long-term shareholder value. With the acquisition of FBM, we are strategically expanding our pro offering to serve the large pro, especially their plan spend.

The acquisition of <unk> strengthens our portfolio Diversifies, our revenue streams and allow us to capture a larger portion of pro sales all of which is expected to deliver significant long term value to our shareholders.

Brandon and I will discuss this acquisition in more detail later in the call, but first I'll turn to our results for the quarter.

Speaker #5: We're now well positioned to not only continue driving growth with our core DIY and small to medium pro customers, but this acquisition also unlocks our ability to serve the larger pro within a $250 billion total addressable market.

In the second quarter of 2025, we deliver sales of $24 billion.

With comparable sales up one 1%.

We drove solid performance in both pro and DIY and strength in seasonal sales as weather improved throughout the quarter.

Speaker #5: The acquisition of FBM strengthens our portfolio, diversifies our revenue streams, and allows us to capture a larger portion of pro sales, all of which is expected to deliver significant long-term value to our shareholders.

Brandon Sink: The acquisition of FBM strengthens our portfolio, diversifies our revenue streams, and allows us to capture a larger portion of pro sales, all of which is expected to deliver significant long-term value to our shareholders. Brandon and I will discuss this acquisition in more detail later in the call. First, I will turn to our results for the quarter. In the second quarter of 2025, we delivered sales of $24 billion, with comparable sales up 1.1%. We drove solid performance in both pro and DIY and strengthened seasonal sales as weather improved throughout the quarter. In addition to sales growth, our persistent focus on productivity drove better-than-expected operating performance, leading to adjusted diluted EPS of $4.33, an increase of 5.6% over last year. Our perpetual productivity improvement, or PPI, initiatives continue to deliver results we set out to achieve.

In addition to sales growth our persistent focus on productivity drove better than expected operating performance, leading to adjusted diluted earnings per share of $4 33.

Speaker #5: Brandon and I will discuss this acquisition in more detail later in the call, but first, I'll turn to our results for the quarter. In the second quarter of 2025, we delivered sales of $24 billion, with comparable sales up 1.1%.

An increase of five 6% over last year.

And our perpetual productivity improvement or PPR initiatives continued to deliver results, we set out to achieve.

This is a testament to the culture, we built prioritizing continuous improvement throughout the business.

Speaker #5: We drove solid performance in both Pro and DIY and strengthened seasonal sales as weather improved throughout the quarter. In addition to sales growth, our persistent focus on productivity drove better-than-expected operating performance, leading to adjusted diluted earnings per share of $4.33, an increase of 5.6% over last year.

Later in the call Bill and Joe will share a specific examples of these initiatives.

Across the board, we're pleased with the results we delivered as we continue to execute against our long term strategy and invest in areas that position us for sustainable growth.

Two our total home strategy, we're able to deliver continued pro growth this quarter stacking on top of strong mid single digit growth in Q2 of last year.

Speaker #5: In our Perpetual Productivity Improvement, or PPI, initiatives, we continued to deliver the results we set out to achieve. This is a testament to the culture we built, prioritizing continuous improvement throughout the business.

Brandon Sink: This is a testament to the culture we built, prioritizing continuous improvement throughout the business. Later in the call, Bill and Joe will share specific examples of these initiatives. Across the board, we are pleased with the results we delivered as we continue to execute against our long-term strategy and invest in areas that position us for sustainable growth. Through our total home strategy, we were able to deliver continued pro growth this quarter, stacking on top of strong mid-single-digit growth in Q2 of last year. Additionally, we grew our online sales by 7.5%, partly driven by a more immersive shopping experience and increased traction for MyLowe’s Rewards, which is helping us increase customer loyalty and drive repeat purchases. We also launched the first home improvement creator network with MrBeast, the world's most followed creator among the first to join.

Additionally, we grew online sales by seven 5%, partly driven by a more immersive shopping experience and increased traction from our lowest rewards, which is helping us increase customer loyalty and drive repeat purchases.

Speaker #5: Later in the call, Bill and Joe will share specific examples of these initiatives. Across the board, we’re pleased with the results we delivered as we continue to execute against our long-term strategy and invest in areas that position us for sustainable growth.

We also launched our first home improvement created network with Mr. <unk>. The world's most followed creator among the first to join this network is aimed at partnering with Influencers across social media as trusted voices to drive brand engagement for our products and services.

Speaker #5: Through our toll-home strategy, we were able to deliver continued pro growth this quarter, stacking on top of strong mid-single-digit growth in Q2 of last year.

We're excited to see how our new creative network will enhance our connection with Gen Z and millennial customers.

Speaker #5: Additionally, we grew our online sales by 7.5%, partly driven by a more immersive shopping experience and increased traction for MyLowe's rewards, which is helping us increase customer loyalty and drive repeat purchases.

We're also continuing our marketing partnership will allow them messy widely recognized as the best cycle player in the world as well as our sponsorship of the NFL as the official home improvement partner.

Speaker #5: We also launched the first home improvement creator network with MrBeast, the world's most followed creator, among the first to join. This network is aimed at partnering with influencers across social media as trusted voices to drive brand engagement for our products and services.

Turning to the macro environment homeowners remains financially healthy supported by strong balance sheets wage growth and low unemployment.

Brandon Sink: This network is aimed at partnering with influencers across social media as trusted voices to drive brand engagement for our products and services. We are excited to see how our new creator network will enhance our connection with Gen Z and Millennial customers. We are also continuing our marketing partnership with Lionel Messi, widely recognized as the best soccer player in the world, as well as our sponsorship of the NFL as the official home improvement partner. Turning to the macro environment, homeowners remain financially healthy, supported by strong balance sheets, wage growth, and low unemployment. The medium to long-term outlook for the home improvement industry remains positive, driven by an aging housing stock, which is at a record high, substantial homeowner equity, and the pent-up demand from delayed projects.

The medium to long term outlook for the home improvement industry remains positive driven by an aging housing stock, which is at a record high substantial homeowner equity and the pent up demand from delayed projects in fact industry analysts estimate that there's roughly $50 billion of deferred project demand.

Speaker #5: We're excited to see how our new creator network will enhance our connection with Gen Z and Millennial customers. We're also continuing our marketing partnership with Lionel Messi, widely recognized as the best soccer player in the world, as well as our sponsorship of the NFL as the official home improvement partner.

As many homeowners have delayed a larger discretionary projects over the past few years.

Speaker #5: Turning to the macro environment, homeowners remain financially healthy, supported by strong balance sheets, wage growth, and low unemployment. The medium- to long-term outlook for the home improvement industry remains positive, driven by an aging housing stock, which is at a record high, substantial homeowner equity, and the pent-up demand from delayed projects.

At the same time, an estimated 18 million new homes are needed by 2033.

Together these trends point to a healthy pipeline of demand for home improvement and new home construction ahead.

That's why we are confident that our most recent investments and acquisitions will uniquely position us to accelerate sales growth when the market turns.

Speaker #5: In fact, industry analysts estimate that there's roughly $50 billion of deferred project demand, as many homeowners have delayed larger discretionary projects over the past few years.

Brandon Sink: In fact, industry analysts estimate that there is roughly $50 billion of deferred project demand, as many homeowners have delayed larger discretionary projects over the past few years. At the same time, an estimated 18 million new homes are needed by 2033. Together, these trends point to a healthy pipeline of demand for home improvement and new home construction ahead. That is why we are confident that our most recent investments and acquisitions will uniquely position us to accelerate sales growth when the market turns. Before closing, I would like to officially welcome the Artisan Design Group, or ADG, team to Lowe's. We closed on this acquisition in June, and we believe the future combination of ADG and FBM under the same umbrella will position Lowe's to offer large pro segment customers a full complement of interior finishes to meet their needs.

Before closing I would like to officially welcome the artisan design group or Atg team to lows. We close on this acquisition in June and we believe the future combination of Atg and F. B M. Under the same umbrella will position Lowe's to offer large pro customers a full complement of interior finishes to meet there.

Speaker #5: At the same time, an estimated $18 million new homes are needed by 2033. Together, these trends point to a healthy pipeline of demand for home improvement and new home construction ahead.

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I also want to thank our lowest frontline associates for their commitment to serving our customers day in and day out I love spending time in the stores, where our frontline associates, who remain the driving force behind our company and with that I'll turn it over to Bill.

Speaker #5: That's why we're confident that our most recent investments and acquisitions will uniquely position us to accelerate sales growth when the market turns. Before closing, I would like to officially welcome the Artisan Design Group, or ADG, team to Lowe's.

Thanks, Marvin and good morning, everyone. This quarter, we delivered positive comps in nine of our 14 merchandise divisions, driven by continued growth in pro and online and a solid recovery in our spring seasonal categories.

Speaker #5: We close on this acquisition in June, and we believe the future combination of ADG and FBM under the same umbrella will position Lowe's to offer large pro customers a full complement of interior finishes to meet their needs.

Starting in Heartlands, we delivered positive comps in hardware lawn and garden and tools with widespread strength in key seasonal categories, especially as weather improved we.

Speaker #5: I also want to thank our Lowe's Frontline Associates for their commitment to serving our customers day in and day out. I love spending time in the stores with our Frontline Associates, who remain the driving force behind our company.

Brandon Sink: I also want to thank our Lowe's frontline associates for their commitment to serving our customers day in and day out. I love spending time in the stores with our frontline associates, who remain the driving force behind our company. With that, I will turn it over to Bill Boltz.

We drove positive comps in lawn and garden, partly driven by a solid performance in live goods and the support of our growers as we navigated weather challenges early in the quarter we.

Speaker #5: And with that, I turn it over to Bill.

Speaker #6: Thanks, Marvin, and good morning, everyone. This quarter, we delivered positive comps in nine of our 14 merchandise divisions, driven by continued growth in pro and online, and a solid recovery in our spring seasonal categories.

William Boltz: Thanks, Marvin Ellison, and good morning, everyone. This quarter, we delivered positive comps in nine of our 14 merchandise divisions, driven by continued growth in pro and online and a solid recovery in our spring seasonal categories. Starting in hardlines, we delivered positive comps in hardware, lawn and garden, and tools, with widespread strength in key seasonal categories, especially as weather improved. We drove positive comps in lawn and garden, partly driven by a solid performance in live goods and the support of our growers as we navigated weather challenges early in the quarter. We also saw strength in Scotts soils and fertilizers as customers responded to their great offers. Turning to tools, we delivered strong performance in power tools and tool storage. Customers gravitated toward our robust assortment and compelling offers, including buy-one-get-one free deals from brands like DeWalt, Craftsman, and Cobalt.

We also saw strength in Scott soils in fertilizers as customers responded to their great offers.

Turning to tools, we delivered strong performance in power tools and tool storage.

Customers gravitated towards our robust assortment and compelling offers including buy one get one free deals from brands like Dewalt Craftsman and cobalt.

Speaker #6: Starting in hardlines, we delivered positive comps in hardware, lawn and garden, and tools, with widespread strength in key seasonal categories, especially as weather improved.

Offers like these demonstrate our commitment to highlighting and delivering value for customers both online and in store.

Speaker #6: We drove positive comps in lawn and garden, partly driven by a solid performance in live goods and the support of our growers as we navigated weather challenges early in the quarter.

Turning to building products, we drove positive comps across building materials rough plumbing and lumber as we're seeing continued momentum in repair and maintenance projects. We saw broad based strength in interior categories like plumbing repair water heaters, and drywall as well as in exterior categories like roofing siding and composite.

Speaker #6: We also saw strength in Scotts soils and fertilizers as customers responded to their great offers. Turning to tools, we delivered strong performance in power tools and tool storage. Customers gravitated toward our robust assortment and compelling offers, including buy one, get one free deals from brands like DeWalt, Craftsman, and Cobalt.

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Speaker #6: Offers like these demonstrate our commitment to highlighting and delivering value for customers both online and in-store. Turning to building products, we drove positive comps across building materials, rough plumbing, and lumber, as we're seeing continued momentum in repair and maintenance projects.

In home decor, we delivered positive comps in paint flooring and appliances, where we continue to build on our momentum with both positive sales dollars and unit comps this quarter, along with driving sales growth in all major appliance categories lows.

William Boltz: Offers like these demonstrate our commitment to highlighting and delivering value for customers both online and in store. Turning to building products, we drove positive comps across building materials, rough plumbing, and lumber, as we're seeing continuing momentum in repair and maintenance projects. We saw broad-based strength in interior categories like plumbing repair, water heaters, and drywall, as well as in exterior categories like roofing, siding, and composite decking, where we offer the top three brands in Trex, TimberTech, and Decorators. In home decor, we delivered positive comps in paint, flooring, and appliances, where we continue to build on our momentum with both positive sales dollars and unit comps this quarter, along with driving sales growth in all major appliance categories. Lowe's continues to offer unmatched value in appliances with the broadest assortment and next-day delivery available in virtually every zip code in the U.S.

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Speaker #6: We saw broad-based strength in interior categories like plumbing repair, water heaters, and drywall, as well as in exterior categories like roofing, siding, and composite decking, where we offer the top three brands in Trex, TimberTech, and Decorators.

We're also pleased with our ongoing efforts to build out our powerful pro brand lineup, making sure that we have the brands and products that are most important to these customers over.

Speaker #6: In home decor, we delivered positive comps in paint, flooring, and appliances. We continue to build on our momentum with both positive sales dollars and unit comps this quarter, along with driving sales growth in all major appliance categories.

Over the last few years, we've added brands like Klein tools, Hubbell wallboard tools and more and today. We're excited to welcome Dal tile to lows, which is the best selling tile brand in the country and the pro preferred choice for tile across residential and commercial projects Dal tile offers direct to home and job site delivery ensuring Ms.

Speaker #6: Lowe's continues to offer unmatched value in appliances with the broadest assortment and next-day delivery available in virtually every zip code in the U.S. We're also pleased with our ongoing efforts to build out our powerful Pro brand lineup, making sure that we have the brands and products that are most important to these customers.

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As Marvin mentioned, we remain focused on driving a perpetual productivity improvement or PPI initiatives throughout the business.

William Boltz: We're also pleased with our ongoing efforts to build out our powerful pro brand lineup, making sure that we have the brands and products that are most important to these customers. Over the last few years, we've added brands like Klein Tools, Hubbell, Wallboard Tools, and more. Today, we're excited to welcome Dow Tile to Lowe's, which is the best-selling tile brand in the country and the pro preferred choice for tile across residential and commercial projects. Dow Tile offers direct-to-home and jobsite delivery, ensuring materials arrive when and where they're needed. As Marvin Ellison mentioned, we remain focused on driving our perpetual productivity improvement, or PPI, initiatives throughout the business. One example, we have enhanced our assortment planning tools for seasonal buys over the last few years, which is allowing us to better anticipate demand and optimize our inventory allocation.

One example, we have enhanced our assortment planning tools for seasonal buys over the last few years, which is allowing us to better anticipate demand and optimize our inventory allocation. These enhancements have led to improved sell through and less end of season clearance and ultimately improvement in gross margin.

Speaker #6: Over the last few years, we've added brands like Klein Tools, Hubble, Wallboard Tools, and more. And today, we're excited to welcome Dow Tile to Lowe's, which is the best-selling tile brand in the country and the pro-preferred choice for tile across residential and commercial projects.

Speaker #6: Dow Tile offers direct-to-home and jobsite delivery, ensuring materials arrive when and where they're needed. As Marvin mentioned, we remain focused on driving our Perpetual Productivity Improvement (PPI) initiatives throughout the business.

This brings me to our approach to managing the global sourcing environment I.

I am pleased that the teams are executing our playbook, well and ensuring that we maintain strong assortments and excellent value for our customers with the goal of remaining price competitive.

Speaker #6: One example is that we have enhanced our assortment planning tools for seasonal buys over the last few years, which is allowing us to better anticipate demand and optimize our inventory allocation.

Our merchants are making great progress working closely with our suppliers to help mitigate cost pressures, while ensuring a stable supply for our shared customers and accelerating our country of origin diversification to reduce our single country dependency in any given product category.

Speaker #6: These enhancements have led to improved sell-through and less end-of-season clearance, and ultimately, improvement in gross margin. This brings me to our approach to managing the global sourcing environment.

William Boltz: These enhancements have led to improved sell-through and less end-of-season clearance, and ultimately improvement in gross margin. This brings me to our approach to managing the global sourcing environment. I am pleased that the teams are executing our playbook well and ensuring that we maintain strong assortments and excellent value for our customers with the goal of remaining price competitive. Our merchants are making great progress working closely with our suppliers to help mitigate cost pressures while ensuring a stable supply for our shared customers and accelerating our country of origin diversification to reduce our single country dependency in any given product category. As I wrap up, I want to thank our merchant team, as well as our MST associates and our vendor partners for their continued efforts to deliver the results. Now, I would like to turn the call over to Joe McFarland.

So as I wrap up I want to thank our merchant team as well as our MST associates and our vendor partners for their continued efforts to deliver the results and now I would like to turn the call over to Joe.

Speaker #6: I'm pleased that the teams are executing our playbook well and ensuring that we maintain strong assortments and excellent value for our customers with the goal of remaining price competitive.

Thanks, Bill and good morning, everyone I wanted to start by thanking our frontline associates for their hard work and dedication their extensive knowledge of home improvement relentless customer focus and willingness to adopt new technology are driving measurable impact across the business, we're seeing that impact and higher customer satisfaction scores with significant improvements in the areas of.

Speaker #6: Our merchants are making great progress working closely with our suppliers to help mitigate cost pressures while ensuring a stable supply for our shared customers, and accelerating our country-of-origin diversification to reduce our single-country dependency in any given product category.

Helpfulness and knowledge these.

Speaker #6: So, as I wrap up, I want to thank our merchant team, as well as our MST associates and our vendor partners, for their continued efforts to deliver the results.

These increases coincide with the rollout of Milo companion, our AI powered App designed specifically to support associates on the sales floor.

Speaker #6: And now, I'd like to turn the call over to Joe.

The App is helping new associates build confidence early while enabling experienced associates to expand knowledge across departments.

Speaker #7: Thanks, Bill, and good morning, everyone. I want to start by thanking our Frontliner Associates for their hard work and dedication. Their extensive knowledge of home improvement, relentless customer focus, and willingness to adopt new technology are driving measurable impact across the business.

Joseph McFarland: Thanks, Bill, and good morning, everyone. I want to start by thanking our frontline associates for their hard work and dedication. Their extensive knowledge of home improvement, relentless customer focus, and willingness to adopt new technology are driving measurable impact across the business. We are seeing that impact in higher customer satisfaction scores with significant improvements in the areas of associate helpfulness and knowledge. These increases coincide with the rollout of MyLowe Companion, our AI-powered app designed specifically to support associates on the sales floor. The app is helping new associates build competence early while enabling experienced associates to expand knowledge across departments. For example, a paint department associate in the garden center can use the app to instantly calculate how much mulch a customer needs and recommend the right tools for spreading it.

For example, our paint department associate in the Garden Center can use the app to instantly calculate how much mulch at customer needs and recommend the right tools for spring and our hardware associate can help a customer in the appliance department quickly identified the most energy efficient washer and dryer pair available under $500.

Speaker #7: We're seeing an impact in higher customer satisfaction scores, with significant improvements in the areas of associate helpfulness and knowledge. These increases coincide with the rollout of MyLo Companion, our AI-powered app designed specifically to support associates on the sales floor.

We're pleased with the strong adoption rate, which has already surpassed our targets and because the app is powered by AI. It has the capacity to learn from feedback and deliver even more helpful responses overtime.

Speaker #7: The app is helping new associates build confidence early while enabling experienced associates to expand knowledge across departments. For example, a paint department associate in the garden center can use the app to instantly calculate how much mulch a customer needs and recommend the right tools for spreading it.

Likewise, our customer satisfaction scores remained strong with the pro and as Marvin mentioned, we continued to see year over year growth. In this segment building on mid single digit gains in the second quarter of last year.

Speaker #7: And a hardware associate can help a customer in the appliance department quickly identify the most energy-efficient washer and dryer pair available under $1,500. We're pleased with the strong adoption rate, which has already surpassed our targets.

Joseph McFarland: A hardware associate can help a customer in the appliance department quickly identify the most energy-efficient washer and dryer pair available under $1,500. We are pleased with the strong adoption rate, which has already surpassed our targets. Because the app is powered by AI, it has the capacity to learn from feedback and deliver even more helpful responses over time. Likewise, our customer satisfaction scores remain strong with the pro segment. As Marvin mentioned, we continue to see year-over-year growth in this segment, building on mid-single-digit gains in the second quarter of last year. In our recent pro survey, pros indicated they are confident in their near-term prospects with stable backlogs. Turning now to our perpetual productivity improvement initiatives, or PPI.

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Indicated they are confident in our near term prospects with stable backlogs.

Turning now to our perpetual productivity improvement initiatives or PPI.

Let me provide an update on one of this year's key initiatives streamlining our freight flow process.

Speaker #7: And because the app is powered by AI, it has the capacity to learn from feedback and deliver even more helpful responses over time. Likewise, our customer satisfaction scores remain strong with the pro.

We're using smarter truck organization improved labeling and redesigned cards, creating a more direct path from truck to shelf. These enhancements reduce unnecessary touch points and footsteps, reducing the overall time to complete these processes, which in turn creates payroll productivity.

Speaker #7: And as Marvin mentioned, we continue to see year-over-year growth in this segment, building on mid-single-digit gains in the second quarter of last year. In our recent pro survey, pros indicated they are confident in their near-term prospects, with stable backlogs.

Finally, I am excited to share that we opened three new stores this quarter in key growth markets, North Fort Worth, Texas, Georgetown, Texas, and Maricopa, Arizona and later this week, we are set to open a location embraced to Georgia, new stores are outfitted with our latest enhancements, including an updated front end experience optimize this.

Speaker #7: Turning now to our perpetual productivity improvement initiatives, or PPI. Let me provide an update on one of this year's key initiatives: streamlining our freight flow process.

Joseph McFarland: Let me provide an update on one of this year's key initiatives, streamlining our freight flow process. We are using smarter truck organization, improved labeling, and redesigned carts, creating a more direct path from truck to shelf. These enhancements reduce unnecessary touch points and footsteps, reducing the overall time to complete these processes, which in turn creates payroll productivity. Finally, I am excited to share that we opened three new stores this quarter in key growth markets: North Fort Worth, Texas, Georgetown, Texas, and Maricopa, Arizona. Later this week, we are set to open a location in Brazelton, Georgia. New stores are outfitted with our latest enhancements, including an updated front-end experience, optimized assortment, and upgraded technology.

Speaker #7: We're using smarter truck organization, improved labeling, and redesigned carts, creating a more direct path from truck to shelf. These enhancements reduce unnecessary touchpoints and footsteps, decreasing the overall time to complete these processes, which in turn creates payroll productivity.

Assortment and upgraded technology to drive awareness and engagement in these new communities, we host miles rewards Grand opening events, where we offer members exclusive to accelerate enrollment.

I'd like to personally welcome the new teams from each of these stores and with that I'll turn the call over to Brandon.

Speaker #7: Finally, I'm excited to share that we opened three new stores this quarter in key growth markets: North Fort Worth, Texas; Georgetown, Texas; and Maricopa, Arizona.

Thank you Joe and good morning.

Beginning with our Q2 results, we generated GAAP diluted earnings per share of $4 27.

Speaker #7: And later this week, we are set to open a location in Brazleton, Georgia. New stores are outfitted with our latest enhancements, including an updated front-end experience, optimized assortment, and upgraded technology.

In the quarter, we closed on our acquisition of Atg and recognized $43 million in pre tax transaction costs and purchase accounting adjustments exclude.

Speaker #7: To drive awareness and engagement in these new communities, we host MyLo's Rewards Grand Opening events where we offer members exclusives to accelerate enrollment. I'd like to personally welcome the new teams from each of these stores.

Joseph McFarland: To drive awareness and engagement in these new communities, we host MyLowe’s Rewards Grand Opening Events, where we offer members exclusives to accelerate enrollment. I would like to personally welcome the new teams from each of these stores. With that, I will turn the call over to Brandon.

Excluding these impacts we delivered adjusted diluted earnings per share of $4 33, an increase of five 6% compared to adjusted diluted earnings per share in the prior year quarter.

Speaker #7: And with that, I'll turn the call over to Brandon.

Additionally, in the second quarter of last year, we recorded a pretax gain of $43 million associated with the 2022 sale of our Canadian retail business.

Speaker #8: Thank you, Joe, and good morning. Beginning with our Q2 results, we generated GAAP-diluted earnings per share of $4.27. In the quarter, we closed on our acquisition of ADG and recognized $43 million in pre-tax transaction costs and purchase accounting adjustments.

Brandon Sink: Thank you, Joe, and good morning. Beginning with our Q2 results, we generated GAAP diluted earnings per share of $4.27. In the quarter, we closed on our acquisition of ADG and recognized $43 million in pre-tax, transaction costs, and purchase accounting adjustments. Excluding these impacts, we delivered adjusted diluted earnings per share of $4.33, an increase of 5.6% compared to adjusted diluted earnings per share in the prior year quarter. Additionally, in the second quarter of last year, we recorded a pre-tax gain of $43 million associated with a 2022 sale of our Canadian retail business. My comments from this point forward will include certain non-GAAP comparisons that exclude these impacts where applicable. Q2 sales were $24 billion, with comparable sales up 1.1% in the quarter, driven by recovery in seasonal categories as weather improved, as well as continued strength in pro, online, and appliances.

Comments from this point forward will include certain non-GAAP comparisons that exclude these impacts where applicable.

Q2 sales were $24 billion with comparable sales up one 1% in the quarter driven by a recovery in seasonal categories as weather improved as well as continued strength in pro online and appliances.

Speaker #8: Excluding these impacts, we delivered adjusted diluted earnings per share of $4.33, an increase of 5.6% compared to adjusted diluted earnings per share in the prior year quarter.

Monthly comps were down 1% in May up 0.3% in June and in July we delivered positive transactions and comps up four 7%.

Speaker #8: Additionally, in the second quarter of last year, we recorded a pre-tax gain of $43 million associated with a 2022 sale of our Canadian retail business.

Speaker #8: My comments from this point forward will include certain non-GAAP comparisons that exclude these impacts, where applicable. Q2 sales were $24 billion, with comparable sales up 1.1% in the quarter, driven by recovery in seasonal categories as weather improved, as well as continued strength in pro, online, and appliances.

For the quarter comparable average ticket increased two 9% and comparable transactions declined one 8%.

Adjusted gross margin was 33, 8% in the quarter up 37 basis points from last year with improvements in both shrink and credit revenue as well as continued benefits from our perpetual productivity improvement or PPI initiatives.

Speaker #8: Monthly comps were down 1% in May, up 0.3% in June, and in July, we delivered positive transactions with comps up 4.7%. For the quarter, comparable average ticket increased 2.9%, while comparable transactions declined 1.8%.

Brandon Sink: Monthly comps were down 1% in May, up 0.3% in June, and in July, we delivered positive transactions and comps up 4.7%. For the quarter, comparable average ticket increased 2.9%, and comparable transactions declined 1.8%. Adjusted gross margin was 33.8% in the quarter, up 37 basis points from last year, with improvements in both shrink and credit revenue, as well as continued benefits from our perpetual productivity improvement, or PPI, initiatives. Adjusted SG&A of 17.3% of sales deleveraged 6 basis points, in line with our expectations. Adjusted operating margin rate of 14.7% was up 23 basis points versus prior year, and the adjusted effective tax rate of 24.1% was in line with prior year results. Inventory ended Q2 at $16.3 billion, down $499 million versus prior year.

And adjusted SG&A of 17, 3% of sales Deleveraged six basis points in line with our expectations.

Adjusted operating margin rate of 14, 7% was up 23 basis points versus prior year and the adjusted effective tax rate of 24, 1% was in line with prior year results.

Speaker #8: Adjusted gross margin was 33.8% in the quarter, up 37 basis points from last year, with improvements in both shrink and credit revenue, as well as continued benefits from our Perpetual Productivity Improvement (PPI) initiatives.

Inventory ended Q2 at $16 3 billion down $499 million versus prior year.

We continue to manage our inventory replenishment in line with demand trends, while also driving strong in stocks across both pro and DIY categories.

Speaker #8: In adjusted SG&A of 17.3% of sales, deleveraged six basis points, in line with our expectations. The adjusted operating margin rate of 14.7% was up 23 basis points versus the prior year, and the adjusted effective tax rate of 24.1% was in line with prior year results.

Atg operations did not have a material impact to our Q2 operating results.

We are pleased with our performance this quarter as the organization continued to navigate this uncertain environment, while offering compelling value for our customers across our product assortments.

Speaker #8: Inventory ended Q2 at $16.3 billion, down $499 million versus the prior year. We continue to manage our inventory replenishment in line with demand trends, while also driving strong in-stocks across both pro and DIY categories.

The team's leaned into our best in class tools and processes to rapidly adjust to changing demand trends through the quarter and deliver on our operating commitments.

Brandon Sink: We continue to manage our inventory replenishment in line with demand trends, while also driving strong in stocks across both pro and DIY categories. ADG operations did not have a material impact to our Q2 operating results. We are pleased with our performance this quarter as the organization continued to navigate this uncertain environment while offering compelling value for our customers across our product assortments. The teams leaned into our best-in-class tools and processes to rapidly adjust to changing demand trends through the quarter and deliver on our operating commitments. Turning now to capital allocation. In Q2, we generated $3.7 billion in free cash flow, inclusive of $495 million in capital expenditures, and we invested $1.3 billion for the acquisition of ADG. We paid $645 million in dividends at $1.15 per share and announced a $0.05 per share increase to $1.20 per share for the dividend paid on August 6th.

Turning now to capital allocation and.

In Q2, we generated $3 7 billion in free cash flow inclusive of $495 million in capital expenditures and we invested $1 3 billion for the acquisition of Atg.

Speaker #8: ADG operations did not have a material impact on our Q2 operating results. We are pleased with our performance this quarter as the organization continued to navigate this uncertain environment while offering compelling value for our customers across our product assortments.

We paid $645 million in dividends and $1 15 per share.

And announced a <unk> <unk> per share increased to $1 20 per share for the dividend paid on August 6th.

Speaker #8: The teams leaned in to our best-in-class tools and processes to rapidly adjust to changing demand trends through the quarter and deliver on our operating commitments.

And we ended the quarter with adjusted debt to EBITDAR of 296 times with $4 9 billion of cash and cash equivalents.

Speaker #8: Turning now to capital allocation. In Q2, we generated $3.7 billion in free cash flow, inclusive of $495 million in capital expenditures, and we invested $1.3 billion for the acquisition of ADG.

<unk> delivered a return on invested capital of 29, 5%.

Now turning to our financial outlook.

Our first half results actualized within our expected range of outcomes and looking ahead, our expectations for a roughly flat home improvement market and the performance of our core business remain unchanged.

Speaker #8: We paid $645 million in dividends at $1.15 per share and announced a 5-cent per share increase to $1.20 per share for the dividend paid on August 6th.

The outlook assumes current consumer and home improvement trends persist and our strategic initiatives continued to drive momentum, especially in pro and online.

Speaker #8: And we ended the quarter with adjusted debt to EBITDA of 2.96 times, with $4.9 billion of cash and cash equivalents, and delivered a return on invested capital of 29.5%.

Brandon Sink: We ended the quarter with adjusted debt to EBITDA of 2.96 times, with $4.9 billion of cash and cash equivalents, and delivered a return on invested capital of 29.5%. Turning to our financial outlook, our first half results actualized within our expected range of outcomes. Looking ahead, our expectations for a roughly flat home improvement market and the performance of our core business remain unchanged. The outlook assumes current consumer and home improvement trends persist, and our strategic initiatives continue to drive momentum, especially in pro and online. Today, we are updating our full-year 2025 outlook only to reflect the inclusion of ADG. Taking this into account, we are now expecting sales in the range of $84.5 billion to $85.5 billion, with comparable sales in a range of flat to up 1%.

Today, we are updating our full year 2025 outlook only to reflect the inclusion of atg.

Speaker #8: Now, turning to our financial outlook. Our first-half results actualized within our expected range of outcomes. And looking ahead, our expectations for a roughly flat home improvement market and the performance of our core business remain unchanged.

Taking this into account we are now expecting sales in the range of 84, five to $85 5 billion with comparable sales in a range of flat to up 1%.

We also now expect full year adjusted operating margin in a range of 12, 2% to 12, 3% and adjusted diluted earnings per share of approximately $12 22.

Speaker #8: The outlook assumes current consumer and home improvement trends persist, and our strategic initiatives continue to drive momentum, especially in pro and online. Today, we are updating our full-year 2025 outlook only to reflect the inclusion of ADG.

To $12 45.

And we continue to expect capital expenditures of approximately $2 $5 billion as we invest in the business and opened new stores.

Speaker #8: Taking this into account, we are now expecting sales in the range of $84.5 billion to $85.5 billion, with comparable sales in a range of flat to up 1%.

Please note that this outlook does not include any potential impacts related to the acquisition of FBR.

On an annualized basis, we expect atg to negatively impact consolidated adjusted operating margin by approximately 15 basis points.

Speaker #8: We also now expect full-year adjusted operating margin in a range of 12.2% to 12.3%, and adjusted diluted earnings per share of approximately $12.20 to $12.45.

Brandon Sink: We also now expect full-year adjusted operating margin in a range of 12.2% to 12.3% and adjusted diluted earnings per share of approximately $12.20 to $12.45. We continue to expect capital expenditures of approximately $2.5 billion as we invest in the business and open new stores. Please note that this outlook does not include any potential impacts related to the acquisition of FBM. On an annualized basis, we expect ADG to negatively impact consolidated adjusted operating margin by approximately 15 basis points. To assist you with your modeling, here are a few points to consider for the third quarter. We expect third-quarter comp sales to be approximately 125 basis points above the bottom end of our full-year guide. We also expect third-quarter adjusted operating margin rate to be down approximately 20 basis points from prior year adjusted operating margin rate, driven by ADG operating mix.

Now to assist you with your modeling here are a few points to consider for the third quarter, we expect third quarter comp sales to be approximately 125 basis points above the bottom end of our full year guide and we also expect third quarter adjusted operating margin rate to be down approximately 20 basis points from prior year adjusted op.

Speaker #8: And we continue to expect capital expenditures of approximately $2.5 billion as we invest in the business and open new stores. Please note that this outlook does not include any potential impacts related to the acquisition of FBM.

Operating margin rate driven by ADT operating mix.

In closing we are confident our total home strategic initiatives are resonating with customers and that we are making the right investments both organic and inorganic to position the company for sustainable long term sales growth and shareholder value creation.

Speaker #8: On an annualized basis, we expect ADG to negatively impact consolidated, adjusted operating margin by approximately 15 basis points. Now, to assist you with your modeling, here are a few points to consider for the third quarter.

Speaker #8: We expect third quarter comp sales to be approximately 125 basis points above the bottom end of our full-year guide. Additionally, we also expect the third quarter adjusted operating margin rate to be down approximately 20 basis points from the prior year adjusted operating margin rate, driven by ADG operating mix.

And with that I'll hand, the call back over to Marvin to discuss this morning's announcement regarding the acquisition of FBL. Thank you Brandon over the last couple of years, we've been assessing potential new opportunities for growth within our industry, we evaluated a number of options, including F. B M. Since the beginning of this year, we met with the <unk>.

Speaker #8: In closing, we are confident our total home strategic initiatives are resonating with customers and that we are making the right investments—both organic and inorganic—to position the company for sustainable, long-term sales growth and shareholder value creation.

Brandon Sink: In closing, we are confident our total home strategic initiatives are resonating with customers and that we are making the right investments, both organic and inorganic, to position the company for sustainable long-term sales growth and shareholder value creation. With that, I will hand the call back over to Marvin Ellison to discuss this morning's announcement regarding the acquisition of FBM.

Agent team, many times and visited several of their sites across the country.

We continue to be impressed not only with their industry expertise, but also their strong focus on revenue growth, which allowed them to seamlessly integrate multiple product verticals.

Speaker #8: And with that, I will hand the call back over to Marvin to discuss this morning's announcement regarding the acquisition of FBM.

We have now identified <unk> as a right strategic fit for Lowe's to best complement our total home strategy and continue to position the company for long term sustainable growth.

Speaker #5: Thank you, Brandon. Over the last couple of years, we've been assessing potential new opportunities for growth within our industry. We've evaluated a number of options, including FBM.

Brandon Sink: Thank you, Brandon. Over the last couple of years, we've been assessing potential new opportunities for growth within our industry. We evaluated a number of options, including FBM. Since the beginning of this year, we met with the FBM management team many times and visited several of their sites across the country. We continue to be impressed not only with their industry expertise, but also their strong focus on revenue growth, which allowed them to seamlessly integrate multiple product verticals. We have now identified FBM as the right strategic fit for Lowe's to best complement our total home strategy and continue to position the company for long-term sustainable growth. I'd like to start by highlighting their core strengths. Then I'll walk through the strategic rationale for this acquisition.

I'd like to start by highlighting the core strength and then I'll walk through the strategic rationale for this acquisition.

Speaker #5: Since the beginning of this year, we have met with the FBM management team many times and visited several of their sites across the country. We continue to be impressed not only with their industry expertise, but also with their strong focus on revenue growth, which has allowed them to seamlessly integrate multiple product verticals.

As you can see on slides six and seven F. B M has a proven 14 year track record of growth and a strong reputation with both the residential homebuilder and with commercial pros across new construction and repair and remodel applications.

Speaker #5: We have now identified FBM as the right strategic fit for Lowe's to best complement our toll-home strategy and continue to position the company for long-term sustainable growth.

<unk> has a diversified customer base and its commercial business, including hospitals data centers and office buildings. This.

<unk> creates more stability.

Speaker #5: I'd like to start by highlighting their core strengths, and then I'll walk through the strategic rationale for this acquisition. As you can see on slides six and seven, FBM has a proven 14-year track record of growth and a strong reputation with both residential home builders and commercial pros across new construction and repair and remodel applications.

And better Insulates the company from the ups and downs of the housing cycle.

Also achieve scale the right way.

Brandon Sink: As you can see on slides six and seven, FBM has a proven 14-year track record of growth and a strong reputation with both the residential home builder and with commercial pros across new construction and repair and remodel applications. FBM has a diversified customer base in its commercial business, including hospitals, data centers, and office buildings. This mix creates more stability and better insulates the company from the ups and downs of the housing cycle. FBM also achieves scale the right way, both as a disciplined buyer and builder. Since its inception in 2011, the company has successfully integrated more than 60 acquisitions across multiple product verticals and opened more than 50 Greenfield locations. The result: a purpose-built, highly scalable, multi-trade distribution platform.

<unk> as a disciplined buyer and builder and since its inception in 2011. The company has successfully integrated more than 60 acquisitions across multiple product verticals and opened more than 50 Greenfield locations.

The result of purpose built highly scalable multi trade distribution platform.

Speaker #5: FBM has a diversified customer base and is a commercial business, including hospitals, data centers, and office buildings. This mix creates more stability and better insulates the company from the ups and downs of the housing cycle.

And today <unk> is a leader in drywall ceiling systems and metal framing, where an established presence loyal customer base and a highly effective sales force that optimizes advanced selling tools to drive engagement and conversion.

Speaker #5: FBM also achieves scale the right way, both as a disciplined buyer and builder. Since its inception in 2011, the company has successfully integrated more than 60 acquisitions across multiple product verticals and opened more than 50 greenfield locations.

One of the most compelling aspects of the <unk> acquisition is a strategic presence in key geographies, such as California, the northeast and Midwest regions, where we currently have less of a presence. This provides us with significant growth opportunities to expand our pro footprint and capture sales in these areas.

Speaker #5: The result? A purpose-built, highly scalable, multi-trade distribution platform. And today, FBM is a leader in drywall, ceiling systems, and metal framing, with an established presence, a loyal customer base, and a highly effective sales force that optimizes advanced selling tools to drive engagement and conversion.

Brandon Sink: Today, FBM is a leader in drywall, ceiling systems, and metal framing with an established presence, loyal customer base, and a highly effective sales force that optimizes advanced selling tools to drive engagement and conversion. One of the most compelling aspects of the FBM acquisition is its strategic presence in key geographies such as California, the Northeast, and the Midwest, regions where we currently have less of a presence. This provides us with significant growth opportunities to expand our pro footprint and capture sales in these areas of dense population. With over 370 branches across the U.S. and Canada, FBM's extensive network is both expansive and highly complementary to our existing operations, further enhancing our ability to scale and drive long-term growth. Over the years, FBM has built a strong financial profile with consistent profitable growth.

Dense population.

With over 370 branches across the U S and Canada <unk> extensive network is both expensive and highly complementary to our existing operations further enhancing our ability to scale and drive long term growth.

Speaker #5: One of the most compelling aspects of the FBM acquisition is its strategic presence in key geographies such as California, the Northeast, and the Midwest—regions where we currently have less of a presence.

Over the years <unk> has built a strong financial profile with consistent profitable growth.

And from 2019 through 2020 for FM drove revenue CAGR of approximately 25% and adjusted EBITDA CAGR of 30% through a combination of acquisitions organic growth and Greenfield expansions.

Speaker #5: This provides us with significant growth opportunities to expand our pro footprint and capture sales in these areas of dense populations. With over 370 branches across the U.S. and Canada, FBM's extensive network is both expansive and highly complementary to our existing operations, further enhancing our ability to scale and drive long-term growth.

This impressive track record of outperforming our public peers and pro distribution over this timeframe.

Now moving to slide eight <unk> is led by talented industry veterans at every level of the organization.

Speaker #5: Over the years, FBM has built a strong financial profile with consistent profitable growth. From 2019 through 2024, FBM drove revenue CAGR of approximately 25% and adjusted EBITDA CAGR of 30%.

Founder and CEO Ruben Mendoza started with a single branch 14 years ago and build an industry leading platform has a proven history of attracting and retaining top talent and a leadership team thats been with <unk> for roughly a decade on average this leadership team brings a disciplined approach to execution and in extent.

Brandon Sink: From 2019 through 2024, FBM drove revenue CAGR of approximately 25% and adjusted EBITDA CAGR of 30% through a combination of acquisitions, organic growth, and Greenfield expansions. This impressive track record outperformed their public peers in pro distribution over this time frame. Moving to slide eight, FBM is led by talented industry veterans at every level of the organization. Founder and CEO Ruben Mendoza started with a single branch 14 years ago and built an industry-leading platform. He has a proven history of attracting and retaining top talent and a leadership team that has been with FBM for roughly a decade on average. This leadership team brings a disciplined approach to execution and an extensive base of 40,000 pro customers. Like us, they focus on continuous improvement while always putting the customer first.

Speaker #5: Through a combination of acquisitions, organic growth, and greenfield expansions, this impressive track record outperformed their public peers in pro distribution over this timeframe. Now, moving to slide eight, FBM is led by talented industry veterans at every level of the organization.

Ziv base of 40000 pro customers and.

And like us they focus on continuous improvement, while always putting the customer first.

And we're excited to welcome them to Lowe's and look forward to working with them as they continue to lead this business.

Speaker #5: Founder and CEO Ruben Mendoza started with a single branch 14 years ago and built an industry-leading platform. His proven history of attracting and retaining top talent, along with a leadership team that has been with FBM for roughly a decade on average.

Now I'd like to spend a moment on the strategic rationale for this acquisition on.

On slide nine you can see how this deal strengthens lowest position and while we're still enthusiastic about the opportunity ahead.

First this acquisition enhances our offering for pro customers and expands our capabilities in a number of ways will have faster fulfillment for larger deliveries as we use <unk> capabilities to expand job site delivery for Lowe's.

Speaker #5: This leadership team brings a disciplined approach to execution and an extensive base of 40,000 pro customers. Like us, they focus on continuous improvement while always putting the customer first. We’re excited to welcome them to Lowe's and look forward to working with them as they continue to lead this business.

We'll also expand our combined product offerings to both <unk> and Lowe's pro customers as we build on strong vendor relationships across both companies.

Brandon Sink: We are excited to welcome them to Lowe’s and look forward to working with them as they continue to lead this business. I would like to spend a moment on the strategic rationale for this acquisition. On slide nine, you can see how this deal strengthens Lowe’s position and why we are so enthusiastic about the opportunity ahead. First, this acquisition enhances our offering for pro customers and expands our capabilities in a number of ways. We will have faster fulfillment for larger deliveries as we use FBM’s capabilities to expand jobsite delivery for Lowe’s. We will also expand our combined product offerings to both FBM and Lowe’s pro customers as we build on strong vendor relationships across both companies. In the short run, we plan to add key FBM products along with their fulfillment capabilities to the pro extended aisle in our Lowe’s stores.

Speaker #5: And I'd like to spend a moment on the strategic rationale for this acquisition. On slide nine, you can see how this deal strengthens Lowe's position, and while we're so enthusiastic about the opportunity ahead.

In the short run we plan to add key SPM products, along with their fulfillment capabilities to the pro extended out and our low stores.

And we will bring the catalog of Loews key pro Skus Ftm's pro customers to drive greater attachment of Loews complimentary products.

Speaker #5: First, this acquisition enhances our offering for pro customers and expands our capabilities in a number of ways. We'll have faster fulfillment for larger deliveries as we use FBM's capabilities to expand jobsite delivery for Lowe's, and we'll also expand our combined product offerings to both FBM and Lowe's pro customers, as we build on strong vendor relationships across both companies.

And further strengthen our pro digital tools by using the <unk> mobile App, which offers real time pricing ordering and delivery tracking a complex orders and is available in both English and Spanish. In addition, we plan to use <unk> blueprint takeoff technology to enhance our offering at a low store protests, which will <unk>.

Speaker #5: In the short run, we plan to add key FBM products along with their fulfillment capabilities to the pro extended aisle in our Lowe's stores.

Automatically extract material quantities and measurements from digital construction plans significantly accelerating the speed and accuracy of the estimating process.

Speaker #5: And we'll bring the catalog of Lowe's key pro SKUs to FBM's pro customers to drive greater attachment of Lowe's complementary products. Furthermore, we'll strengthen our pro digital tools by using the MyFBM mobile app, which offers real-time pricing, ordering, and delivery tracking for complex orders and is available in both English and Spanish.

Brandon Sink: We will bring the catalog of Lowe’s key pro SKUs to FBM’s pro customers to drive greater attachment of Lowe’s complementary products. Further, we will strengthen our pro digital tools by using the MyFBM mobile app, which offers real-time pricing, ordering, and delivery tracking for complex orders and is available in both English and Spanish. In addition, we plan to use FBM’s AI Blueprint Takeoff technology to enhance our offering at our Lowe’s store pro desk, which will automatically extract material quantities and measurements from digital construction plans, significantly accelerating the speed and accuracy of the estimating process. We will enhance our trade credit offering, which will be helpful for pros shopping our stores for larger projects. Second, this acquisition gives us the opportunity to create a platform for ongoing growth in pro distribution.

And we will enhance our trade credit offering which will be helpful for pros shopping our stores for larger projects.

Second this acquisition gives us the opportunity to create a platform for ongoing growth in pro distribution.

Over the long term, we plan to utilize <unk> successful integration playbook, including a rapid transition to a single ERP platform.

Speaker #5: In addition, we plan to use FBM's AI blueprint takeoff technology to enhance our offering at our Lowe's store pro desk, which will automatically extract material quantities and measurements from digital construction plans.

This will position Lowe's will continued growth across key product categories.

Speaker #5: Significantly accelerating the speed and accuracy of the estimating process. We will also enhance our trade credit offering, which will be helpful for professionals shopping at our stores for larger projects.

Also as I mentioned earlier with our recent acquisition of Atg, we're excited to see how quickly both <unk> and atg will allow us to offer our customers a best in class comprehensive interior solutions platform as outlined on slide 10.

Speaker #5: Second, this acquisition gives us the opportunity to create a platform for ongoing growth and product distribution. Over the long term, we plan to utilize FBM's successful integration playbook, including a rapid transition to a single ERP platform.

With an estimated 18 million new homes needed by 2033, we envision incorporating the products and services from each company to provide large pro customers with everything from dry wall or ceiling systems installation to doors as well as flooring cabinets and countertops.

Brandon Sink: Over the long term, we plan to utilize FBM's successful integration playbook, including a rapid transition to a single ERP platform. This will position Lowe's for continued growth across key product categories. As I mentioned earlier, with our recent acquisition of ADG, we are excited to see how quickly both FBM and ADG will allow us to offer our customers a best-in-class comprehensive interior solutions platform as outlined on slide 10. With an estimated 18 million new homes needed by 2033, we envision incorporating the products and services from each company to provide large pro customers with everything from drywall to ceiling systems, insulation to doors, as well as flooring, cabinets, and countertops.

Speaker #5: This will position Lowe's for continued growth across key product categories. Also, as I mentioned earlier, with our recent acquisition of ADG, we're excited to see how quickly both FBM and ADG will allow us to offer our customers a best-in-class comprehensive interior solutions platform, as outlined on slide 10.

While we continue to serve our DIY in small to medium pro customers through our stores and online we are confident that operating both <unk> and atg under the same umbrella will help us offer differentiated products and services for the large pros planned spin.

Speaker #5: With an estimated 18 million new homes needed by 2033, we envision incorporating the products and services from each company to provide large pro customers with everything from drywall to ceiling systems, insulation to doors, as well as flooring, cabinets, and countertops.

And finally this acquisition marks the next step in our multiyear strategy to transform our pro offering and it helps us deepen our reach with pro customers and it unlocks our ability to serve larger pros within this $250 billion total addressable market.

Speaker #5: While we continue to serve our DIY and small to medium pro customers through our stores and online, we are confident that operating both FBM and ADG under the same umbrella will help us offer differentiated products and services for the large pro's plan span.

Brandon Sink: While we continue to serve our DIY and small to medium pro customers through our stores and online, we are confident that operating both FBM and ADG under the same umbrella will help us offer differentiated products and services for the large pros' planned spend. Finally, this acquisition marks the next step in our multi-year strategy to transform our pro offering, and it helps us deepen our reach with pro customers. It unlocks our ability to serve larger pros within this $250 billion total addressable market. It will increase our pro penetration while allowing us to better balance our DIY and pro revenue streams, resulting in sustainable long-term sales growth. Taken together, these moves will allow us to serve pros more comprehensively, achieving greater scale through our distribution network, and move with greater speed and flexibility than ever before.

It will increase our pro penetration, while allowing us to better balance our DIY and pro revenue streams result, again sustainable long term sales growth.

Taken together these moves will allow us to serve pros more comprehensively achieving greater scale through our distribution network and move with greater speed and flexibility than ever before.

Speaker #5: And finally, this acquisition marks the next step in our multi-year strategy to transform our pro offering, and it helps us deepen our reach with pro customers.

In closing, we couldnt be more excited about what's ahead for Loews as we combine forces with FBR.

Speaker #5: And it unlocks our ability to serve larger pros within this $250 billion total addressable market. It will increase our pro penetration while allowing us to better balance our DIY and pro revenue streams, resulting in sustainable long-term sales growth.

This acquisition will diversify our revenue streams and allow us to deliver long term value to our shareholders and with that I'd like to turn it over to Brandon who will tell you more about the transaction details.

Thanks, Marvin this is a great day at Lowe's as we announced this exciting transaction that will not only enhance our pro offering but also better position the company for long term sustainable sales and profit expansion.

Speaker #5: Taken together, these moves will allow us to serve pros more comprehensively, achieving greater scale through our distribution network, and moving with greater speed and flexibility than ever before.

The transaction details are outlined on slide 11 and include a purchase price of $8 8 billion.

Speaker #5: In closing, we couldn't be more excited about what's ahead for Lowe's as we combine forces with FBM. This acquisition will diversify our revenue streams and allow us to deliver long-term value to our shareholders.

Brandon Sink: In closing, we couldn't be more excited about what's ahead for Lowe's as we combine forces with FBM. This acquisition will diversify our revenue streams and allow us to deliver long-term value to our shareholders. With that, I would like to turn it over to Brandon, who will tell you more about the transaction details.

Which reflects an adjusted EBITDA multiple of 13 four times.

The acquisition is expected to close in the fourth quarter of 2025 subject to customary closing conditions, including regulatory approvals.

Speaker #5: And with that, I'd like to turn it over to Brandon, who will tell you more about the transaction details.

Speaker #8: Thanks, Marvin. This is a great day at Lowe's as we announce this exciting transaction that will not only enhance our pro offering but also better position the company for long-term sustainable sales and profit expansion.

Brandon Sink: Thanks, Marvin. This is a great day at Lowe's as we announce this exciting transaction that will not only enhance our pro offering but also better position the company for long-term sustainable sales and profit expansion. The transaction details are outlined on slide 11 and include a purchase price of $8.8 billion, which reflects an adjusted EBITDA multiple of 13.4 times. The acquisition is expected to close in the fourth quarter of 2025, subject to customary closing conditions, including regulatory approvals. It is expected to be accretive to adjusted diluted EPS in the first full year after closing, excluding synergies. We intend to fund the acquisition through a combination of short-term and long-term debt.

It is expected to be accretive to adjusted diluted earnings per share in the first full year after closing excluding synergies.

We intend to fund the acquisition through a combination of short term and long term debt.

Speaker #8: The transaction details are outlined on slide 11 and include a purchase price of $8.8 billion, which reflects an adjusted EBITDA multiple of 13.4 times.

We expect that the robust cash flow generation of our core business combined with <unk> track record of strong cash flows will allow us to delever quickly down to our target ratio by the end of the second quarter of 2027.

Speaker #8: The acquisition is expected to close in the fourth quarter of 2025, subject to customary closing conditions, including regulatory approvals. It's expected to be accretive to adjusted diluted earnings per share in the first full year after closing, excluding synergies.

We also plan to pause share repurchases until that time.

We intend to maintain our solid investment grade credit ratings of Triple B plus.

And be double a one.

Our capital allocation priorities remain unchanged, we will continue to invest first in growth to support our 35% dividend payout target and return excess capital to shareholders through share repurchases.

Speaker #8: We intend to fund the acquisition through a combination of short-term and long-term debt. We expect that the robust cash flow generation of our core business, combined with FBM's track record of strong cash flows, will allow us to delever quickly down to our target ratio by the end of the second quarter of 2027.

Brandon Sink: We expect that the robust cash flow generation of our core business, combined with FBM's track record of strong cash flows, will allow us to delever quickly down to our target ratio by the end of the second quarter of 2027. We also plan to pause share repurchases until that time. We intend to maintain our solid investment-grade credit ratings of BBB+ and BAA1. Our capital allocation priorities remain unchanged. We will continue to invest first in growth to support our 35% dividend payout target and return excess capital to shareholders through share repurchases. As Marvin mentioned, the FBM team has delivered consistent, profitable growth since its founding. In 2024, on a pro forma basis, FBM generated approximately $6.5 billion in revenue and $635 million in EBITDA. Looking ahead, we expect that FBM will continue to grow organically and through Greenfield expansion in the near term.

As Marvin mentioned the SPM team has delivered consistent profitable growth since its founding.

In 2024 on a pro forma basis, <unk> generated approximately $6 5 billion in revenue and $635 million in EBITDA.

Speaker #8: We also plan to pause share repurchases until that time. We intend to maintain our solid investment-grade credit ratings of triple-B plus and double-A one.

And looking ahead, we expect the SPM will continue to grow organically and through Greenfield expansion in the near term.

Speaker #8: Our capital allocation priorities remain unchanged. We will continue to invest first in growth to support our 35% dividend payout target and return excess capital to shareholders through share repurchases.

We also expect to drive incremental revenue and EBITDA with the cross selling opportunities that Marvin outlined through our combined product offering.

And we expect to deliver cost savings, primarily by optimizing procurement administrative and logistic spend.

Speaker #8: As Marvin mentioned, the FBM team has delivered consistent profitable growth since its founding. In 2024, on a pro forma basis, FBM generated approximately $6.5 billion in revenue and $635 million in EBITDA.

In closing this transaction will strengthen our competitive position accelerate the execution of our long term strategy and further position the company for the expected market recovery.

Speaker #8: And looking ahead, we expect that FBM will continue to grow organically and through greenfield expansion in the near term. We also expect to drive incremental revenue and EBITDA with the cross-selling opportunities that Marvin outlined through our combined product offering.

This in turn will create meaningful lasting value for our shareholders.

And with that we'll open it up for your questions.

Brandon Sink: We also expect to drive incremental revenue and EBITDA with the cross-selling opportunities that Marvin outlined through our combined product offering. We expect to deliver cost savings primarily by optimizing procurement, administrative, and logistics spend. In closing, this transaction will strengthen our competitive position, accelerate the execution of our long-term strategy, and further position the company for the expected market recovery. This, in turn, will create meaningful, lasting value for our shareholders. With that, we will open it up for your questions.

Thank you.

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Speaker #8: And we expect to deliver cost savings, primarily by optimizing procurement, administrative, and logistics spend. In closing, this transaction will strengthen our competitive position, accelerate the execution of our long-term strategy, and further position the company for the expected market recovery.

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Speaker #8: This, in turn, will create meaningful, lasting value for our shareholders. And with that, we will open it up for your questions.

Thank you. The first question today is from the line of Steven Forbes with Guggenheim Securities. Please proceed with your questions.

Good morning, everyone.

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Rob: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for our first question. Thank you. The first question today is from the line of Stephen Forbes with Guggenheim Securities. Please proceed with your questions.

Marvin.

Curious if you can expand on foundations year to date performance in 2025, given its pretty impressive growth track record for both sales and EBITDA and then comment on what percentage of the 33000 Skus will be net new to the broader Lowe's offering.

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Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for our first question.

Hey, Steve Good morning, Yes, those are good questions on their year to date performance, we're not going to get into that level of detail until last after we close the transaction I can tell you. We're very excited and we're excited about the historical trends and their performance from a sales and EBITDA and profit performance again, we think they are.

Speaker #3: Thank you. The first question today is from the line of Stephen Forbes with Guggenheim Securities. Please proceed with your questions.

Speaker #9: Good morning, everyone. Marvin, I'm curious if you can expand on Foundation's year-to-date performance in 2025, given its pretty impressive growth track record for both sales and EBITDA.

Speaker 9: Good morning, everyone. Marvin, curious if you could expand on Foundation Building Materials' year-to-date performance in 2025, given its pretty impressive growth track record for both sales and EBITDA, and then comment on what percentage of the 33,000 SKUs will be net new to the broader Lowe's offering.

The best player in the sector and it's one of the reasons why we were attracted to them relative to the Skus again, a little too early for us to get into that level of detail, but as Brendan both outlined in our prepared comments, we see a.

Speaker #9: And then comment on what percentage of the $33,000 SKUs will be net new to the broader Lowe's offering.

Speaker #5: Hey, Steve, good morning. Those are good questions. On their year-to-date performance, we're not going to get into that level of detail until after we close the transaction.

The immediate benefit of lows, providing complementary attachment products to their large pro customers.

Brandon Sink: Hey, Steve, good morning. Those are good questions. On their year-to-date performance, we are not going to get into that level of detail until after we close the transaction. I can tell you we are very excited, and we are excited about the historical trends in their performance from a sales, EBITDA, and profit performance. Again, we think they are the best player in the sector, and it is one of the reasons why we were attracted to them. Relative to the SKUs, again, a little too early for us to get into that level of detail. But as Brandon Sink and I both outlined in our prepared comments, we see an immediate benefit of Lowe’s providing complementary attachment products to their large pro segment customers. Through our pro desk, we just feel like that we have significant opportunities to get their products, their fulfillment capabilities connected to our customers.

And through our App.

Speaker #5: I can tell you we're very excited, and we're excited about the historical trends in their performance from a sales, EBITDA, and profit perspective. Again, we think they're the best player in the sector, and it's one of the reasons why we were attracted to them.

Pro desk, we just feel like that we have significant opportunities to get their products their fulfillment capabilities connected to our customers and we think thats going to give us short term benefits as we've worked through this entire process as Steve and I would just add on the revenue side, we do believe meaningful synergy opportunities here, we think.

Speaker #5: Relative to the SKUs, again, it is a little too early for us to get into that level of detail. But as Brandon and I both outlined in our prepared comments, we see an immediate benefit of Lowe's providing complementary attachment products to their large pro customers. Through our pro desk, we just feel like we have significant opportunities to get their products and their fulfillment capabilities connected to our customers. We think that's going to give us short-term benefits as we work through this entire process.

There are significant cross selling opportunities Martin mentioned, <unk> got a broader product offering certain core categories that they carry drywall ceilings.

Framing insulation, our approach stent at all infrastructure that we've been building should allow us to quickly plug that in in access that across our stores. Our msas and then on the flip side Lowe's as has our broader product offering in complementary categories that we believe can help FPL drive greater attachment and examples there tools safety equipment.

Brandon Sink: We think that is going to give us short-term benefits as we work through this entire process.

Speaker #9: It's Steve, and I would just add, you know, on the revenue side, we do believe there are meaningful synergy opportunities here. We think there's significant cross-selling opportunities.

Brandon Sink: Steve, I would just add, on the revenue side, we do believe meaningful synergy opportunities here. We think there are significant cross-selling opportunities. Marvin Ellison mentioned FBM has a broader product offering, certain core categories that they carry: drywall, ceilings, metal framing, insulation. Our pro extended aisle infrastructure that we have been building should allow us to quickly plug that in and access that across our stores, our MSAs. On the flip side, Lowe's has our broader product offering and complementary categories that we believe can help FBM drive greater attachment. Examples there are tools, safety equipment, fasteners. That is a very small percentage of what FBM's revenue mix is today. We think we can expand that further and more meaningfully.

Fasteners Thats, a very small percentage of our <unk> revenue mix is today.

Think we can expand that further and more meaningfully.

Speaker #9: Marvin mentioned that FBM has a broader product offering in certain core categories that they carry: drywall, ceilings, metal framing, insulation, and our Pro Extended Aisle infrastructure that we've been building.

And then as a follow up.

Explore foundations our solutions on their website.

It looks like order management trade credit offering.

Speaker #9: Should allow us to quickly plug that in and access that across our stores, our MSAs. On the flip side, Lowe's has our broader product offering and complementary categories that we believe can help FBM drive greater attachment.

Some of our highlights curious Marvin and just get your initial thoughts on <unk>.

And what sort of solutions, our offerings can mean for the broader Lowe's experience.

Among the current pro customer base.

Speaker #9: And examples there, tools, safety equipment, you know, fasteners, that's a very small percentage of what FBM's revenue mix is today. We think we can expand that further in a more meaningful way.

That's just one of the reasons why we selected them as.

As the acquisition target.

We have a very effective transfer.

Transformation process relative to how quickly they can convert.

Speaker #9: And then as a follow-up, as we sort of explore Foundation's solutions, on their website, it looks like order management, drape trade credit, and offerings are some of their highlights.

Speaker 9: As we explore Foundation Building Materials' solutions on their website, it looks like order management, trade credit offering, are some of their highlights. Curious, Marvin Ellison, to just get your initial thoughts on what those solutions or offerings can mean for the broader Lowe's experience among the current pro segment customer base.

Our own rollouts on their ERP platform. So they have a consistent companywide ERP, which makes it a lot easier for us from a.

Speaker #9: Curious, Marvin, and just get your initial thoughts on what those sort of solutions or offerings can mean for the broader Lowe's experience among the current pro customer base.

Synergistic and integration perspective. In addition to that we talked about there their AI driven blueprint takeoff technology, which is the best I've ever seen and we think we can immediately plugged it in to every pro desk and our 1700 50 plus stores.

Speaker #5: That's one of the reasons why we selected them as the acquisition target. They have a very effective transformation process relative to how quickly they can convert their own roll-ups on their ERP platform.

Brandon Sink: is one of the reasons why we selected them as the acquisition target. They have a very effective transformation process relative to how quickly they can convert their own roll-ups on their ERP platform. So, they have a consistent company-wide ERP, which makes it a lot easier for us from a synergistic and integration perspective. In addition to that, we talked about their AI Blueprint Takeoff technology, which is the best I have ever seen. We think we can immediately plug that into every pro desk in our 1,750-plus stores. As Brandon Sink mentioned, the ability to get them connected to our endless aisle at our pro desk from a product and fulfillment standpoint, we think will immediately benefit some of our medium pro customers and some of the large customers that come in that we cannot service at a high level. Their MyFBM mobile app is best-in-class.

Brandon mentioned.

Ability to get them connected to our endless aisle at our pro desk from a product and fulfillment standpoint, we think will immediately benefit some of our medium pro customers and some of the large customers that come in that we can't service at a high level and they're my F. B M mobile app.

Speaker #5: So they have a consistent company-wide ERP, which makes it a lot easier for us from a synergistic and integration perspective. In addition to that, we talked about their AI-driven blueprint takeoff technology, which is the best I've ever seen.

Best in class. It provides real time view of pricing inventory availability order deliveries and Thats also something we believe we can quickly plug in to our pro desk and so.

Speaker #5: And we think we can immediately plug that into every Pro Desk in our 1,750-plus stores. As Brandon mentioned, you know, the ability to get them connected to our endless aisle at our Pro Desk, from a product and fulfillment standpoint, we think will immediately benefit some of our medium pro customers and some of the large customers that come in that we can't service at a high level.

The key for US was we really believe that SPM could complement us from a large complex preprint plans Pearl which is where we have capability needs, but we were even more attractive that SPM can help us in our 1700 50 store pro desk with our small to medium.

Speaker #5: And there’s my FBM mobile app. It’s best in class. It provides a real-time view of pricing, inventory availability, and order deliveries. And that’s also something we believe we can quickly plug in, you know, to our Pro Desk.

Pro with some of the capabilities that they have not dimension as I stated in my prepared comments when you look at their geographic footprint.

Brandon Sink: It provides real-time view of pricing, inventory availability, and order deliveries. That is also something we believe we can quickly plug in to our pro desk. The key for us was we really believe that FBM could complement us from a large, complex pre-plant plans pro, which is where we have capability needs. We were even more attracted that FBM can help us in our 1,750 store pro desk with our small to medium pro with some of the capabilities that they have. Not to mention, as I stated in my prepared comments, when you look at their geographic footprint, they have a dominant presence in California, which is their home base. They have a dominant presence in the Northeast and in the key metro markets in the Midwest. These are areas that we have the least amount of store density.

They have a dominant presence in California, which is our home base. They have a dominant presence in the northeast and into key metro markets in the Midwest and these are areas that we have the least amount of store density and being able to have co presence in these densely populated urban areas as some.

Speaker #5: And so the key for us was we really believe that FBM could complement us from a large complex pre-planned pro, which is where we have capability needs. But we were even more attracted that FBM can help us in our 1,750 store pro desk with our small to medium pro with some of the capabilities that they have.

Thing that Lowe's has been trying to accomplish for couple of decades, and so we think this acquisition gives us the ability to start to build from there.

Speaker #5: Not to mention, as I stated in my prepared comments, when you look at their geographic footprint, they have a dominant presence in California, which is their home base.

Thank you.

Thanks, Dave.

The next question is from the line of Peter Benedict with Baird. Please proceed with your questions.

Speaker #5: They have a dominant presence in the Northeast and in the key metro markets in the Midwest. And these are areas that we have the least amount of store density.

Oh, Hey, guys. Good morning, Thanks for taking the question I'm going to stay with the core loans business for now, but the first question just on that I mean, do you guys do a pro sentiment survey.

Speaker #5: And being able to have a pro presence in these densely populated urban areas is something that Lowe's has been trying to accomplish for a couple of decades.

Brandon Sink: Being able to have a pro presence in these densely populated urban areas is something that Lowe’s has been trying to accomplish for a couple of decades. We think this acquisition gives us the ability to start to build from there.

Every quarter you mentioned the <unk>.

Table backlog, but I'm wondering if you can kind of expand on that anything else you got from those surveys.

Speaker #5: And so, we think this acquisition gives us the ability to start to build from there.

This time around anything around labor availability or anything else you would call out. That's my first question, yes, So Peter I think at a high level of the pros again, they reinforce the stable backlogs and that their business and their backlogs are healthy.

Speaker #9: Thank you.

Speaker 9: Thank you.

Speaker #5: Thanks, Steve.

Brandon Sink: Thanks, Steve.

Speaker #3: The next questions are from the line of Peter Benedict with Baird. Please proceed with your questions.

Rob: The next questions are from the line of Peter Benedict with Baird. Please proceed with your questions.

Speaker #10: Oh, hey guys. Good morning. Thanks for taking the question. I'm going to stay with the core Lowe's business for now. But the first question is sort of, yeah, I mean, do you guys do a pro sentiment survey every quarter?

Speaker 9: Hey, guys. Good morning. Thanks for taking the question. I am going to stay with the core Lowe’s business for now. The first question is, I mean, you guys do a pro sentiment survey every quarter. You mentioned the stable backlogs, but I am wondering if you could expand on that. Anything else you have got from those surveys this time around? Anything around labor availability or anything else that you would call out? That is my first question.

Over 75% of the pros stated they were confident in their job prospects, which again is consistent with what we've heard in past quarters.

But they're also advising us as they continue to concentrate on smaller projects, especially repair remodel and maintenance, which again is what we're seeing in the small to medium pro which has been our sweet spot.

Speaker #10: You mentioned the stable backlogs, but I'm wondering if you can kind of expand on that. Is there anything else you've got from those surveys this time around?

Speaker #10: Anything around labor availability or anything else that you would call out? That's my first question.

Speaker #5: Yeah, so Peter, I think at a high level, the pros again reinforce the stable backlogs and that their business and their backlogs are healthy.

Brandon Sink: Yeah. So, Peter, I think at a high level, the pros, again, they reinforce the stable backlogs and that their business and their backlogs are healthy. Over 75% of the pros stated that they were confident in their job prospects, which, again, is consistent with what we have heard in past quarters. They are also advising us that they continue to concentrate on smaller projects, especially repair, remodel, and maintenance, which, again, is what we are seeing. The small to medium pro, which has been our sweet spot, from a customer segment, that has been the pivot for them with this lock-in effect with very low housing turnover. The only concern they gave us is labor costs are going up for them.

From a customer segment.

That's been the pivot for them with this lock in effect with very low housing turnover.

The only concern they gave us as labor costs are going up for them and so one of the reasons why Loews has wanted to champions in the business Roundtable of trying to create these skill trade jobs in the country, there is becoming more and more of a shortage of skilled tracing.

Speaker #5: Over 75% of the pros stated that they were confident in their job prospects, which again is consistent with what we've heard in past quarters.

Speaker #5: But they're also advising us that they continue to concentrate on smaller projects, especially repair, remodel, and maintenance, which again is what we're seeing. Then, the small to medium pro has been our sweet spot, you know, from a customer segment. That's been the pivot for them, with this lock-in effect and very low housing turnover.

<unk> plumbers.

Carpentry electricians, and we're starting to see that pop up in different parts of the country, but overall our approach feel really good about the prospects for the balance of the year and that bode well for us to continue to take share with the small and medium customer.

Speaker #5: The only concern they gave us is, you know, labor costs are going up for them. And so, one of the reasons why Lowe's is one of the champions, you know, in the Business Roundtable of trying to create these skilled trade jobs in the country.

That's great. That's helpful. My follow up question is on the flooring category. It was called out as being I think positive in the quarter, maybe just talk about what's happening in flooring, which is something youre doing something youre seeing more broadly just maybe expand on that a little but thanks very much Peter thanks for the question, we saw strength in our flooring business really across.

Brandon Sink: So one of the reasons why Lowe's is one of the champions in the business roundtable of trying to create these skilled trade jobs in the country, there is becoming more and more of a shortage of skilled trades and master plumbers, carpentry, electricians. We are starting to see that pop up in different parts of the country. Overall, our pros feel really good about their prospects for the balance of the year. That bodes well for us to continue to take share with the small to medium customer.

Speaker #5: There's becoming more and more of a shortage of skilled trades, including master plumbers, carpenters, and electricians. We're starting to see that pop up in different parts of the country.

Couple of key segments across carpets are soft surface business as well as our tile business adhesives as we look at our strength with our pro customer and so a nice blend of both DIY and pro business within our tile within our tile and tile in flooring program as well as our carpet program and then.

Speaker #5: But overall, our pros feel really good about their prospects for the balance of the year, and that bodes well for us to continue to take share with the small to medium customer.

Speaker #9: That's great. That's helpful. My follow-up question is on the flooring category. It was called out as being a positive in the quarter. Maybe just talk about what's happening in flooring, which is something you're doing, something you're seeing more broadly.

Speaker 9: That's great. That's helpful. My follow-up question is on the flooring category. It was called out as being a big positive in the quarter. Maybe just talk about what's happening in flooring, which is something you're doing, something you're seeing more broadly. Just maybe expand on that a little bit. Thanks very much.

We're also excited as we announced in my prepared remarks, we're bringing downtime the lows and so.

Significant brand of tile for us to be able to get access to for both the do it yourself on a pro customer and we're excited what they bring to our program as we continue to strengthen what we're doing in Florida.

Speaker #9: Just maybe expand on that a little bit. Thanks very much. Yeah, Peter, thanks for the question. We saw strength in our flooring business really across a couple of key segments: our carpet, our soft surface business, as well as our tile, business adhesives. As we look at, you know, our strength with our pro customer.

Brandon Sink: Yeah, Peter, thanks for the question. We saw strength in our flooring business really across a couple of key segments, across carpets, our soft surface business, as well as our tile business, adhesives, as we look at our strength with our pro customer. So a nice blend of both DIY and pro business within our tile and flooring program, as well as our carpet program. Then we are also excited, as I announced in my prepared remarks, of bringing Daltile to Lowe's. So that is a significant brand of tile for us to be able to get access to for both a do-it-yourself or a pro customer. We are excited about what they bring to our program as we continue to strengthen what we are doing in flooring.

And Peter I will just add we're also very pleased with our central selling as you can remember that flooring was our first category that we centralized for selling.

Speaker #9: And so, we have a nice blend of both DIY and pro business within our tile and flooring program, as well as our carpet program. We're also excited, as we announced in my prepared remarks, to be bringing Dow Tile to Lowe's.

This has really freed up our red best associates to really stay focused on the customer.

Improving the LTR for installations, so, we're making nice progress there as well.

Speaker #9: And so, you know, that's a significant brand of tile for us to be able to get access to for both the do-it-yourself and the pro customer.

Great. That's helpful. Thanks, So much guys. Good luck.

Our next question comes from the line of David Bellinger with Mizuho Securities. Please proceed with your questions.

Speaker #9: And we're excited about what they bring to our program as we continue to strengthen what we're doing in flooring. And Peter, I'll just add, we're also very pleased with our central selling.

Hey, guys. Good morning, Thanks for all the detail today just on the transformational deal can you give us.

Brandon Sink: Peter, I will just add, we are also very pleased with our central selling. As you can remember, flooring was our first category that we centralized for selling. This has really freed up our Red Vest associates to really stay focused on the customer and improving the LTR for installations. So, we are making nice progress there as well.

Speaker #9: As you can remember, the flooring was our first category that we centralized for selling. This has really freed up our red vest associates to stay focused on the customer and improving the LTR for installations, so we're making nice progress there as well.

Some of the customer numbers or maybe the makeup of those customers what size. They are in terms of annual revenues and then also within that is there one specific capability that you see the most opportunity from whether it's the <unk>.

Delivery of our trade credit where can that be.

Speaker #9: Great. That's helpful. Thanks so much, guys. Good luck.

Speaker 9: Great. That's helpful. Thanks so much, guys. Good luck.

Most exciting for loans, especially putting over to corvid.

Speaker #3: Our next question is coming from the line of David Bellinger with Mizuho Securities. Please proceed with your questions.

Rob: Our next questions come from the line of David Bellinger with Mizuho Securities. Please proceed with your questions.

Yes, David I'll hit the customer piece first really a diverse and highly fragmented base. They have about 40000 customers and thats across the U S and Canada and just from a concentration account no single customer accounts.

Speaker #10: Hey, guys. Good morning. Thanks for all the detail today. Just on the transformational deal, can you give us, you know, some of the customer numbers or maybe the makeup of those customers with what size they are in terms of annual revenues?

Speaker 9: Hey, guys. Good morning. Thanks for all the detail today. Just on this transformational deal, can you give us some of the customer numbers or maybe the makeup of those customers, what size they are in terms of annual revenues? Also, within that, is there one specific capability that you see the most opportunity from, whether it is the delivery or trade credit? Where can that be most exciting for Lowe’s, especially porting over to the core business?

For more than 1% of the revenue so really when we look at the base little to no <unk>.

Speaker #10: And then also within that, is there one specific capability that you see the most opportunity from, whether it's the delivery or trade credit?

Oncentration risk and I would also mentioned, we really like the mix of the business overall, it's about 45% residential so that serves both single family multifamily, 55% commercial which is split between new construction repair remodel.

Speaker #10: Where can that be most exciting for Lowe's, especially porting over to the core business?

Speaker #9: Yeah, David, I'll hit the customer piece first. Really, a diverse and highly fragmented base. They have about 40,000 customers, and that's across the U.S.

Brandon Sink: Yeah, David, I'll hit the customer piece first. Really a diverse and highly fragmented base. They have about 40,000 customers, and that's across the U.S. and Canada. From a concentration account, no single customer accounts for more than 1% of the revenue. When we look at the base, there is little to no concentration risk. I would also mention, we really like the mix of the business overall. It's about 45% residential, so that serves both single-family, multifamily, 55% commercial, which is split between new construction, repair, remodel. We believe this balance lends itself to diversification, provides that balance to our overall portfolio. Specifically on the commercial side, there is less cyclicality and more of a sub-end market diversification. I like the mix of the business overall and, again, little to no concentration risk from a customer standpoint. Marvin, I'll toss the second part of that over to you.

And we believe this balance lends itself the diversification provides that balance to our overall portfolio.

Speaker #9: And Canada, from just a concentration account perspective, no single customer accounts for more than 1% of the revenue. So really, when we look at the base, there's little to no concentration risk.

Specifically on the commercial side.

Less cyclicality and more of a sub end market diversification. So like the mix of the business overall and again little to no concentration risks from a customer standpoint, Marvin and I'll toss. The second part of it yes, and look the only thing I'll add and we talked about the combination of <unk> and <unk>, our previous acquisition and what's interesting is.

Speaker #9: And I would also mention we really like the mix of the business overall. It's about 45% residential, which serves both single-family and multifamily, and 55% commercial, which is split between new construction, repair, and remodel. We believe this balance lends itself to diversification and provides that balance to our overall portfolio.

In some cases when it comes to single family construction. They serve the same large customer, but they provide totally different solutions and so we just had this vision that we can take <unk> core business model, which focuses on countertops cabinets flooring.

Speaker #9: And specifically on the commercial side, you know, less cyclicality and more of a sub-end market diversification. So I'd like the mix of the business overall.

Speaker #9: And again, little to no concentration risk from a customer standpoint. And Marvin, I'll toss the second part of that over to you.

Product and install and then you combine that with SPM and we just envision having the ability to provide draw wall ceiling systems installation doors flooring cabinets and countertops.

Speaker #5: Yeah, and look, the only thing I'll add, you know, we talked about the combination of FBM and ADG, our previous acquisition. And what's interesting is that, in some cases when it comes to single-family construction, they serve the same large customer, but they provide totally different solutions.

Brandon Sink: Yeah, and look, the only thing I will add, we talked about the combination of FBM and ADG, our previous acquisition. What is interesting is that in some cases, when it comes to single-family construction, they serve the same large customer, but they provide totally different solutions. We just have this vision that we can take ADG's core business model, which focuses on countertops, cabinets, flooring, product and install, and then you combine that with FBM. We just envision having the ability to provide drywall, ceiling systems, insulation, doors, flooring, cabinets, and countertops, all for one large customer. We think that is going to be incredibly beneficial to the large single-family, multifamily construction company and customer. We think this company is something that is one of the reasons why we were attracted to make this acquisition with the hopes that we could put these two companies together.

All for one large customer and we think that's going to be incredibly beneficial to us.

The large single family multifamily construction company and customer and we think this company is something that is one of the reason why we were attracted to.

Speaker #5: And so we just have this vision that we can take ADG's core business model, which focuses on countertops, cabinets, and flooring—product and install—and then you combine that with FBM. We just envision having the ability to provide drywall, ceiling systems, insulation, doors, flooring, cabinets, and countertops all for one large customer.

Make this acquisition with the hopes that we could put these two companies together.

Got it thanks for all that and I also wanted to pivot over to the guidance and what's implied in the back half a bit of an acceleration in same store sales growth.

Just help us understand how much of that is due to pricing we have noticed some incremental price increases across the store is that fully embedded within the back half or is that potential upside as we move through Q3 in Q4. Thank you.

Speaker #5: And we think that's going to be incredibly beneficial to the large single-family and multifamily construction company and customer. We believe that this company is one of the reasons why we were attracted to make this acquisition, with the hopes that we could put these two companies together.

David Let me I'll, just say that the overall second half kind of guidance assumptions overall I'll start with the macro piece first and really I think expectations Theyre more of the same as we look at the second half of our year.

Speaker #10: Got it. Yeah, thanks for all that. And I also wanted to pivot over to the guidance and what's implied in the back half a bit of an acceleration and the same sort of sales growth.

Speaker 9: Got it. Yeah, thanks for all that. I also wanted to pivot over to the guidance and what is implied in the back half, a bit of an acceleration in comparable sales growth. Can you just help us understand how much of that is due to pricing? We have noticed some incremental price increases across the store. So is that fully embedded within the back half, or is that potential upside as we move through Q3 and Q4? Thank you.

Still working through some short term challenges, including elevated mortgage rates cautious consumer affordability remains a pressure point that results in Milwaukee in effect that we've been seeing and also a depressed housing market. So similar to what we said at the beginning of the year and back in May.

Speaker #10: Can you just help us understand how much of that is due to pricing? We have noticed some incremental price increases across the store. So, is that fully embedded within the back half, or is that potential upside as we move through Q3 and Q4?

We expect the overall home improvement market to be flat for the full year that expectation continues.

Speaker #10: Thank you.

Speaker #5: Yeah, David. Let me just say the overall second-half guidance assumptions overall. I'll start with the macro piece first, and really, I think expectations there are more of the same as we look at the second half of our year.

Brandon Sink: Yeah, David, let me, I will just say the overall second half kind of guidance assumptions overall. I will start with the macro piece first. Really, I think expectations there are more the same as we look at the second half of our year. We are still working through some short-term challenges, including elevated mortgage rates. Cautious consumer affordability remains a pressure point that results in the lock-in effect that we have been seeing, and also a depressed housing market. Similar to what we said at the beginning of the year and back in May, we expect the overall home improvement market to be flat for the full year. That expectation continues. When you look at the first half results, we landed roughly where we expected outside some tough weather early in Q2, where we started slower through Memorial Day holiday, but it accelerated as we moved through July.

You look at the first half results, we landed roughly where we expected outside some tough weather early in Q2, where we started slower through memorial day holiday, but it accelerated as we moved through July.

Speaker #5: We're still working through some short-term challenges, including elevated mortgage rates. Cautious consumer affordability remains a pressure point that results in the lock-in effect that we've been seeing.

Nice almost 5% exit rate there a portion of July comp was driven by the seasonal shift, but we also saw solid performance in both pro.

Speaker #5: And also a depressed housing market. So, similar to what we said at the beginning of the year and back in May, we expect the overall home improvement market to be flat for the full year.

And DIY in Q2, so as we turn the page to the second half our outlook really is unchanged since the beginning of the year. The range implies flat to two 5% comp we expect that to be a split evenly across Q3 and Q4 than.

Speaker #5: That expectation continues. You know, when you look at the first half results, we landed roughly where we expected outside of some tough weather. Early in Q2, we started slower through the Memorial Day holiday, but it accelerated as we moved through July.

And we expected gradual improvements in the underlying business as we move through the year and Thats, both on a one and two year comp basis.

Speaker #5: Really nice, almost 5% exit rate there. A portion of July comp was driven by the seasonal shift, but we also saw solid performance in both pro and DIY in Q2.

Brandon Sink: Really nice, almost 5% exit rate there. A portion of July comp was driven by the seasonal shift, but we also saw solid performance in both pro and DIY in Q2. As we turn the page to the second half, our outlook really is unchanged since the beginning of the year. The range implies flat to 2.5% comp. We expect that to be split evenly across Q3 and Q4. We expected gradual improvements in the underlying business as we move through the year. That is both on a one and two-year comp basis. We continue to expect to see benefits from our total home initiatives, total home strategy as that ramps across the back half of the year. That is both in the pro space and the DIY space.

And then we continue to expect to see benefits from our total home initiatives total home strategy as that ramps across the back half of the year and that's both in the pro space in the DIY space and David This is Marvin specific to pricing we said.

Speaker #5: So, as we turn the page to the second half, our outlook really is unchanged since the beginning of the year. The range implies flat to 2.5% comp.

In our previous earnings call that we would maintain a portfolio approach, we would be price competitive and that's exactly what we've done in Q2, that's what we're continuing to do in the back half of the year prices in retail will always be dynamic prices will fluctuate up and down through various categories.

Speaker #5: We expect that to be split evenly across Q3 and Q4. We also anticipate gradual improvements in the underlying business as we move through the year.

Speaker #5: And that's both on a one- and two-year comp basis. We continue to expect to see benefits from our Total Home initiatives and Total Home strategy as that ramps across the back half of the year.

Based on competitive responses internal algorithms is not like the old days, where you manually changing prices a lot of this is systemic and we feel like we have the best in class tools to manage that exceptionally well and we've been very transparent about that and that's how we're going to manage it we feel good about our promotional strategy as well you look at some of the.

Speaker #5: And that's both in the pro space and the DIY space. And David, this is Marvin. Specific to pricing, you know, we said in our previous earnings call that we would maintain a portfolio approach.

Brandon Sink: David, this is Marvin Ellison. Specific to pricing, we said in our previous earnings call that we would maintain a portfolio approach. We would be price competitive. That is exactly what we have done in Q2. That is what we are continuing to do in the back half of the year. Prices in retail will always be dynamic. Prices will fluctuate up and down through various categories based on competitive responses, internal algorithms. It is not like the old days where you are manually changing prices. A lot of this is systemic. We feel like we have best-in-class tools to manage that exceptionally well. We have been very transparent about that. That is how we are going to manage it. We feel good about our promotional strategy as well. You look at some of the things that we were able to do with Bill Boltz's team for July 4.

Speaker #5: We would be price competitive, and that's exactly what we've done. In Q2, that's what we're continuing to do. In the back half of the year, you know, prices in retail will always be dynamic.

Things that we were able to do with Bill's team.

For July 4th.

We were promotional we drove great footsteps bill talked about the positive unit comps in appliances as well as positive sale and again you can look at that and said it was a great value oriented environment and we think that's going to be more of the same pause for the back half of the year.

Speaker #5: You know, prices will fluctuate up and down through various categories based on competitive responses and internal algorithms. It's not like the old days where you're manually changing prices.

Speaker #5: A lot of this is systemic, and we feel like we have the best-in-class tools to manage that exceptionally well. We have been very transparent about that.

I appreciate it thank you Paul Yeah. Thanks, David.

The next question is from the line of Christopher Harvest with Jpmorgan. Please proceed with your questions.

Speaker #5: And that's how we're going to manage it. We feel good about our promotional strategy as well. You look at some of the things that we were able to do with Bill's team for July 4th; we were in promotional, and we drove great footsteps.

Thanks, Good morning, everybody.

Follow up on.

On the weather question, you talked about $400 million potentially shifting into the second quarter from the first quarter or did all of that happened and is it fair to say that weather was net neutral or do you think it was maybe a tailwind or headwind in this in the second quarter, especially if you think about the strength in July.

Brandon Sink: We were in promotional. We drove great footsteps. Bill Boltz talked about the positive unit comps and appliances, as well as positive sales. Again, you could look at that and say it was a great value-oriented environment. We think that is going to be more the same for us for the back half of the year.

Speaker #5: Bill talked about the positive unit comps and appliances, as well as positive sales. Again, you can look at that and say it was a great value-oriented environment.

Speaker #5: And we think that's going to be more of the same for us for the back half of the year.

Speaker #10: I appreciate it. Thank you both.

Speaker 9: Appreciate it. Thank you both.

Speaker #5: Yeah. Thanks, David.

Yes, Chris I would say, we realized a large majority of that 400. If you go back to the beginning of the year. The way we Cadenced out Q1 Q2, we plan for more normal weather Q2, we expected the seasonal shift of about $400 million I would say with the exception of a couple of weeks around.

Brandon Sink: Yeah, thanks, David.

Speaker #3: The next questions are from the line of Christopher Horvitz with JP Morgan. Please proceed with your questions.

Rob: Next question is from the line of Christopher Horvitz with J.P. Morgan. Please proceed with your questions.

Speaker #11: Thanks. Good morning, everybody. So I'll follow up a bit on the weather question. You had talked about $400 million potentially shifting into the second quarter from the first quarter.

Speaker 9: Thanks. Good morning, everybody. I will follow up a bit on the weather question. You talked about $400 million potentially shifting into the second quarter from the first quarter. Did all of that happen? Is it fair to say that weather was net neutral, or do you think it was maybe a tailwind or a headwind in the second quarter, especially if you think about the strength in July?

Around Memorial day, where it was.

Slower because of the wet colder weather as we got into June and July very much played out as expected so really happy with engagement that we saw we had.

Speaker #11: Did all of that happen? And is it fair to say that the weather was net neutral, or do you think it was maybe a tailwind or a headwind in the second quarter, especially if you think about the strength in July?

Great traffic in the store as Marvin mentioned, great performance across our seasonal categories very much inline with our expectations.

Speaker #9: Yeah, Chris, I would say we realized a large majority of that $400. If you go back to the beginning of the year, the way we cadenced out Q1 and Q2, we planned for more normal weather in Q2.

Brandon Sink: Yeah, Chris, I would say we realized the large majority of that $400 million. If you go back to the beginning of the year, the way we cadenced out Q1 and Q2, we planned for more, you know, normal weather. Q2, we expected the seasonal shift of about $400 million. I would say with the exception of the couple of weeks around Memorial Day, where it was, you know, slower because of the wet, colder weather. As we got into June and July, it very much played out as expected. So really happy with the engagement that we saw. We had great traffic in the store, as Marvin Ellison mentioned, great performance across our seasonal categories and very much in line with our expectations.

Got it and then on the acquisition side. My question is is there sort of a secondary investment cycle that emerges in the core low supply chain as you build out larger pro fulfillment operations to perhaps get ahead of future revenues for.

Speaker #9: We expected the seasonal shift of about $400 million. I would say, with the exception of the couple of weeks around Memorial Day, where it was, you know, slower because of the wet, colder weather, as we got into June and July, it very much played out as expected.

For the pro planned purchase.

Asked another way does the these acquisitions do you sort of like the investment in fulfillment and.

Speaker #9: So, we're really happy with the engagement that we saw. We had, you know, great traffic in the store. As Marvin mentioned, we had great performance across our seasonal categories.

Our branches and warehouses grow with that business or do you see the need to take this $2 5 billion of Capex and make a step up to <unk>.

Speaker #9: And very much in line with our expectations.

Speaker #11: Got it. And then on the acquisition side, my question is, is there sort of a secondary investment cycle that emerges in the core Lowe's supply chain as you build out, you know, larger pro fulfillment operations to perhaps get ahead of the future revenues for the Pro Plan purchase?

Speaker 9: Got it. On the acquisition side, my question is, is there a secondary investment cycle that emerges in the core Lowe’s supply chain as you build out larger pro fulfillment operations to perhaps get ahead of the future revenues for the pro plan purchase? Asked another way, do these acquisitions, do the investment in fulfillment and branches and warehouses grow with the business, or do you see the need to take this $2.5 billion of CapEx and make a step up to become more aggressive and get ahead of future growth? Thank you.

Some more aggressive and get ahead of future growth. Thank you Chris.

Really good question as we look at it now we're going to work on integrating and getting this deal closed.

We do see in the future some smaller tuck ins on specific verticals, but we don't have anything in our in our current site to do another large acquisition like this one but we do see continuous investment.

Speaker #11: You know, asked another way, do the acquisitions, do you sort of like the investment in fulfillment and, you know, branches and warehouses grow with the business, or do you see the need to take this $2.5 billion of CapEx and make a step up to become more aggressive in getting ahead of future growth?

And this platform. This is in fact, a platform that we purchased one of the reasons why we chose <unk> because we love the ERP system, we love the verticals that they are in as I mentioned, we love their geographic presence, we love. The fact that they wanted the best technology platform for a small company.

Speaker #11: Thank you.

Speaker #5: Yeah, Chris, it's a really good question. As we look at it now, we're going to work on integrating and getting this deal closed. We do see in the future some small tuck-ins on specific verticals, but we don't have anything in our current site to do another large acquisition like this one.

Brandon Sink: Chris, it is a really good question. As we look at it now, we are going to work on integrating and getting this deal closed. We do see in the future some smaller tuck-ins on specific verticals, but we do not have anything in our current site to do another large acquisition like this one. We do see a continuous investment in this platform. This is, in fact, a platform that we purchased. One of the reasons why we chose FBM is because we love their ERP system. We love the verticals that they are in. As I mentioned, we love their geographic presence. We love the fact that they were one of the best technology platforms for a small company that I have ever witnessed, including how they embrace AI and how they are leveraging that in a way to simplify the job and drive some efficiency.

That I've ever witness, including their how they embrace AI and how they're leveraging that in <unk>.

Way to simplify the job and drive some efficiency and so we believe that we can take this platform and we can leverage our annual Capex span and we can continue to build this out to create something that we think is going to be.

Speaker #5: But we do see a continuous investment in this platform. This is, in fact, a platform that we purchased. One of the reasons why we chose FBM is because we love their ERP system.

Very dominant long term sustainable revenue driver for us.

Speaker #5: We love the verticals that they're in. As I mentioned, we love their geographic presence. We love the fact that they were one of the best technology platforms for small companies that I've ever witnessed, including how they embrace AI and how they're leveraging that, you know, in a way to simplify the job and drive some efficiency.

Thanks, very much have a great labor day.

Our next questions come from the line of Simeon Gutman with Morgan Stanley. Please proceed with your questions.

Hi, This is zach on for Simeon. Thanks for taking a question does the competent flexion signal a turn in home improvement market overall or is it more of a weather and seasonal balance at the end of the quarter.

Speaker #5: And so we believe that we can take this platform and we can leverage our annual CapEx spend and we can continue to build this out to create, you know, something that we think is going to be a very dominant long-term sustainable revenue driver for us.

Brandon Sink: We believe that we can take this platform and we can leverage our annual CapEx spend, and we can continue to build this out to create something that we think is going to be a very dominant, long-term, sustainable revenue driver for us.

Yes, so again, Zach we're not expecting any sort of inflection from a macro standpoint, I mentioned more of the same as we look into the second half of the year similar challenges to how we build our guide at the beginning of the year, what we reinforced in May that's still what we're seeing now again second half we always had.

Speaker #11: Thanks very much. Have a great Labor Day.

Speaker 9: Thanks very much. Have a great Labor Day.

Speaker #5: Thank you.

Brandon Sink: Thank you.

Speaker #3: Our next question is coming from the line of Simeon Gutman with Morgan Stanley. Please proceed with your questions.

Rob: Our next questions come from the line of Simeon Gutman with Morgan Stanley. Please proceed with your questions.

Speaker #11: Hi, this is Zach on for Simeon. Thanks for taking our question. Does the comp inflection signal a turn in the home improvement market overall, or is it more of a weather and seasonal bounce at the end of the quarter?

Speaker 9: Hi, this is Zach on for Simeon. Thanks for taking our question. Does the comp inflection signal a turn in the home improvement market overall, or is it more of a weather and seasonal bounce at the end of the quarter?

Bit of a gradual improvement baked in and then we also expect to see momentum and expect to take share in the second half as we scale. Our total home strategy initiatives. So that's really the difference in the expectation first half versus second half.

Speaker #9: Yeah, so again, Zach, we're not expecting any sort of inflection from a macro standpoint. I mentioned more of the same as we look in the second half of the year.

Brandon Sink: Yeah, so again, Zach, we are not expecting any sort of inflection from a macro standpoint. I mentioned more of the same as we look into the second half of the year, similar challenges to how we built our guide at the beginning of the year, what we reinforced in May. That is still what we are seeing now. Again, second half, we always had a bit of a gradual improvement baked in. We also expect to see momentum and expect to take share in the second half as we scale our total home strategy initiative. So that is really the difference in the expectation first half versus second half.

Got it and then just as a follow up I appreciate all the color on some of the strategic commentary maybe bigger picture.

Speaker #9: Similar challenges to how we build our guide at the beginning of the year, what we reinforced in May, that's still, you know, what we're seeing now.

Can you comment on how low strategy is changing it seems youre, making a more concerted pivot into building products distribution first with ADT and now with SDN. What is the vision here and what makes this pivot so compelling in your view, especially now.

Speaker #9: Again, in the second half, we always had a bit of a gradual improvement baked in, and we also expect to see momentum and expect to take share in the second half.

So Zack this is Barbara I think specifically for US we started out with a focus on what we call retail fundamentals seven years ago. This company had a great balance sheet and a bad strategy.

Speaker #9: As we scale our total home strategy initiatives, that’s really the difference in the expectation for the first half versus the second half.

Speaker #11: Got it. And then, just as a follow-up, I appreciate all the color on some of the strategic commentary. Maybe, bigger picture, can you comment on how Lowe's strategy is changing?

Speaker 9: Got it. Just as a follow-up, I appreciate all the color on some of the strategic commentary, maybe bigger picture. Can you comment on how Lowe’s strategy is changing? It seems you are making a more concerted pivot into building product distribution, first with Artisan Design Group (ADG) and now with Foundation Building Materials (FBM). What is the vision here and what makes this pivot so compelling in your view, especially now?

And so we've been working really hard with a great leadership team and some really really dedicated associates to get the foundation of this business shored up and to create efficiency and I would argue that we are now one of the best operating large retailers in the world, but as we look forward and we look at our total home strategy.

Speaker #11: It seems you're making a more concerted pivot into building product distribution first with ADG and now with FBM. What is the vision here, and what makes this pivot so compelling in your view, especially now?

Speaker #5: So Zach, this is Marvin. I think specifically for us, we started out with a focus on what we call retail fundamentals. Seven years ago, this company had a great balance sheet and a bad strategy.

Brandon Sink: Zach, this is Marvin. I think specifically for us, we started out with a focus on what we call retail fundamentals. Seven years ago, this company had a great balance sheet and a bad strategy. We have been working really hard with a great leadership team and some really, really dedicated associates to get the foundation of this business shored up and to create efficiency. I would argue that we are now one of the best operating large retailers in the world. As we look forward and we look at our total home strategy, which this acquisition and these two acquisitions totally support, the question was really simple. When housing recovers, where will the inflection happen? What categories and what parts of the business do we think will see the greatest growth from that inflection?

<unk>, which which this acquisition and these two acquisitions totally support the.

The question was really simple.

When housing recovers, where will the inflection happen and what categories and what parts of the business do we think we will see the greatest growth from that inflection and as we research. This in great detail. We believe that we had some strategic deficits and how we could take advantage of the inflection there.

Speaker #5: And so we've been working really hard with a great leadership team and some really dedicated associates to get the foundation of this business shored up and to create efficiency.

Speaker #5: And I would argue that we are now one of the best operating large retailers in the world. But as we look forward and we look at our total home strategy, which this acquisition and these two acquisitions totally support, the question was really simple.

We think will be coming in housing we talked about these pent up demand in projects, we've talked about 18 million homes need about 20, <unk> III, we were not positioned as a company to take advantage of that and we didn't want to be sitting on the sidelines and so the two acquisitions that we've made tie perfectly into what we are projecting will be the inflection point.

Speaker #5: When housing recovers, where will the inflection happen? And what categories and what parts of the business do we think we'll see the greatest growth from that inflection?

For housing home improvement and this overall macro environment and that is single family multifamily construction. In addition to repair remodel and having these capabilities to do this in a very efficient way and so it is not a change in strategy is an evolution and strategy and our total home strategy basically.

Speaker #5: And as we research this in great detail, we believe that we have some strategic deficits in how we could take advantage of the inflection that we think will be coming in housing.

Brandon Sink: As we researched this in great detail, we believe that we had some strategic deficits in how we could take advantage of the inflection that we think will be coming in housing. We talked about these pent-up demand in projects. We talked about 18 million homes needed by 2033. We were not positioned as a company to take advantage of that. We did not want to be sitting on the sidelines. The two acquisitions that we have made tie perfectly into what we are projecting will be the inflection point for housing, home improvement, and this overall macro environment. That is single-family, multifamily construction, in addition to repair, remodel, and having these capabilities to do this in a very efficient way. It is not a change in strategy. It is an evolution in strategy. Our total home strategy basically outlined that to a T.

Speaker #5: We talked about pent-up demand and projects. We discussed the need for 18 million homes by 2033. We were not positioned as a company to take advantage of that, and we didn't want to be sitting on the sidelines.

<unk> debt to a tee.

Thank you good luck okay. Thank you.

Speaker #5: And so the two acquisitions that we've made tie perfectly into what we are projecting will be the inflection point for housing and home improvement in this overall macro environment.

The next question is from the line of Michael Lasser with UBS. Please proceed with your questions.

Good morning. Thank you so much for taking my question Marvin It seems like this whole clan perky.

Speaker #5: And that is single-family and multifamily construction, in addition to repair and remodel, having these capabilities to do this in a very efficient way. So it's not a change in strategy; it's an evolution in strategy.

Segment of the market is in the early stages.

Of consolidation.

Let me just bringing together several asset combined.

Speaker #5: And our total home strategy basically outlined that to a T.

With the power of the existing platform.

<unk> its fair share of that market in your mind is that sufficient.

Speaker #11: Thank you. Good luck.

Speaker 9: Thank you. Good luck.

Speaker #5: Okay, thank you.

Brandon Sink: Okay, thank you.

Speaker #3: The next questions are from the line of Michael Lassert with UBS. Please proceed with your questions.

Rob: The next questions are from the line of Michael Lassert with UBS. Please proceed with your questions.

And now to be able to harvest.

Suitable return on these investments that you've been making or.

Speaker #12: Good morning. Thank you so much for taking my question. Marvin, it seems like this pro plan purchase segment of the market is in the early stages of consolidation.

Speaker 9: Good morning. Thank you so much for taking my question. Marvin, it seems like this pro segment of the market is in the early stages of consolidation. Lowe's is bringing together several assets combined with the power of its existing platform to gain its fair share of that market. In your mind, is that sufficient enough to be able to harvest a very suitable return on these investments that you have been making? Or do you think these assets combined with Lowe's need to have a differentiated strategy, a differentiated position in the market as this consolidation unfolds in order to earn a compelling return? Thank you very much.

We think these assets combined with loan need to have a differentiated strategy differentiated positioning in the market as this consolidation unfolds.

Earn a compelling return thank you very much.

Speaker #12: And Lowe's is bringing together several assets, combined with the power of its existing platform, to gain its fair share of that market. In your mind, is that sufficient enough to be able to harvest a very suitable return on these investments that you've been making?

Well Michael Thank you for the question I think I think for US we believe the combination of <unk> and AVG does in fact create differentiation.

We're excited about the possibility of leveraging both of these platforms. When you combine them together it gives us a real opportunity to go after this $250 billion total addressable market as I mentioned before we have a vision that we will be able to go to a customer and provide them everything from dry wall.

Speaker #12: Or do you think these assets, combined with Lowe's, need to have a differentiated strategy, a differentiated position in the market as this consolidation unfolds in order to earn a compelling return?

Speaker #12: Thank you very much.

Speaker #5: No, well, Marvin, thank you for the question. I think for us, we believe the combination of FBM and ADG does, in fact, create differentiation.

Selling systems installation doors flooring cabinets and countertops Theres no other.

Brandon Sink: Marvin, thank you for the question. I think for us, we believe the combination of FBM and ADG does, in fact, create differentiation. We are excited about the possibility of leveraging both of these platforms. When you combine them together, it gives us a real opportunity to go after this $250 billion total addressable market. As I mentioned before, we have a vision that we will be able to go to a customer and provide them everything from drywall, ceiling systems, insulation, doors, flooring, cabinets, and countertops. There is no other player that can walk into a large single-family home builder, a large multifamily home builder, and create that type of proposition and do it with advanced technology.

Layer, they can walk into a large single family homebuilder, a large multifamily homebuilder and create that type of proposition and do it with advanced technology and so it is our expectation and our goal that we're going to build out.

Speaker #5: You know, we're excited about the possibility of leveraging both these platforms. When you combine them together, it gives us a real opportunity to go after this $250 billion total addressable market.

And offering in our solution and fulfillment capabilities that will allow us to have differentiation in this space I just outlined.

Speaker #5: You know, as I mentioned before, we have a vision that we'll be able to go to a customer and provide them everything from drywall, ceiling systems, insulation, doors, flooring, cabinets, and countertops.

Thank you.

Follow up question.

If we are on the precipice of Rick.

Speaker #5: There's no other player that can walk into a large single-family home builder, a large multifamily home builder, and create that type of proposition and do it, you know, with advanced technology.

Covering in home improvement loans.

Although the insurer that all of the heavy lifting associated with integrating these assets that are being brought together does not interfere with Lowe's the ability to harvest the recovering or gain share as the recovery unfolds.

Speaker #5: And so, it is our expectation and our goal that we're going to build out an offering, a solution, and fulfillment capabilities that will allow us to have differentiation in the space I just outlined.

Brandon Sink: It is our expectation and our goal that we are going to build out an offering and a solution and fulfillment capabilities that will allow us to have differentiation in the space I just outlined.

No.

Michael It's another very fair question I think it just comes down to organizational structure and commitment to execution, we have separate integration teams.

Speaker #12: Got it. And my follow-up question is, if we are on the precipice of this recovery in home improvement, how does Lowe's ensure that all of the heavy lifting associated with integrating these assets that are being brought together does not interfere with Lowe's ability to harvest the recovery or gain its fair share as the recovery unfolds?

Speaker 9: Got you. My follow-up question is, if we are on the precipice of this recovery in home improvement, how does Lowe's ensure that all of the heavy lifting associated with integrating these assets that are being brought together does not interfere with Lowe's ability to harvest the recovery or gain its fair share as the recovery unfolds?

That will be working that are working on atg and F. B M. We have separate teams working on the strategic initiatives that will create the synergies that Brandon outlined we're not going to get distracted in the core business everyone sitting at this table and everyone on the senior leadership team at Loews understand.

And how we create shareholder value and so we're going to be really focused on those total home strategy initiatives that we talk so much about on our PPI initiatives that you hear is update you on every quarter.

Speaker #5: No, look, Michael, it's another very fair question. I think it just comes down to organizational structure and commitment to execution. We have separate integration teams that are working on ADG and FBM.

Brandon Sink: No, look, Michael, it is another very fair question. I think it just comes down to organizational structure and commitment to execution. We have separate integration teams that will be working, that are working on ADG and FBM. We have separate teams working on these strategic initiatives that will create the synergies that Brandon Sink outlined. We are not going to get distracted in the core business. Everyone sitting at this table and everyone on the Senior Leadership Team at Lowe's understands how we create shareholder value. We are going to be really focused on those total home strategy initiatives that we talk so much about, on our PPI initiatives that you hear us update you on every quarter. My commitment to the shareholders is that we are not going to get distracted.

So mark my commitment to the shareholders.

Is that we're not going to get distracted we have separate teams managing these two exciting acquisitions, but we also have the core team focused on the Lowe's business, which we know is the key to our success long term.

Speaker #5: We have separate teams working on the strategic initiatives that will create the synergies that Brandon outlined. We're not going to get distracted in the core business.

Speaker #5: Everyone sitting at this table and everyone on the senior leadership team at Lowe's understands how we create shareholder value. And so we're going to be really focused on those Total Home Strategy initiatives that we talked so much about on our PPI initiatives that you hear us update you on every quarter.

Thank you very much and good luck.

<unk>.

The next question is coming from the line of Brian Nagel with Oppenheimer. Please proceed with your questions.

Hey, guys good morning congratulations.

Thank you Brian My first question.

Speaker #5: And so my commitment to the shareholders is that we're not going to get distracted. We have separate teams managing these two exciting acquisitions, but we also have the core team focused on the Lowe's business, which we know is the key to our success long term.

I guess just on the trend of business. So clearly comp sales accelerated as the quarter progressed, we discussed that but I guess the question I ask was there anything notable geographically.

Brandon Sink: We have separate teams managing these two exciting acquisitions, but we also have the core team focused on the Lowe's business, which we know is the key to our success long term.

Yes.

Maybe to help us breakout break apart the benefits of normalizing or improving weather through the period versus maybe some true underlying improvements in underlying demand.

Speaker #11: Thank you very much, and good luck.

Speaker 9: Thank you very much, and good luck.

Speaker #5: Okay, thank you.

Brandon Sink: Thank you.

So Brian I would say geographically the only anomalies that we saw were.

Speaker #3: The next question is coming from the line of Brian Nagle with Oppenheimer. Please proceed with your questions.

Rob: The next questions come from the line of Brian Nagel with Oppenheimer. Please proceed with your questions.

Her akane overlaps, which create some degree of negative comps in certain geographies. In addition to weather.

Speaker #10: Hey guys, good morning. Congratulations.

Speaker 9: Hey, guys. Good morning. Congratulations.

Speaker #5: No, thank you, Brian.

Brandon Sink: Thank you, Brandon.

Speaker #10: My first question, I guess, is on the trend of business. Clearly, comp sales accelerated as the quarter progressed. We discussed that.

Speaker 9: My first question, I guess, is on the trend of the business. Clearly, comparable sales accelerated as the quarter progressed. We discussed that. The question I want to ask is, was there anything notable geographically, maybe to help us break apart the benefits of normalizing or improving weather through the period versus some true underlying improvements in underlying demand?

Brandon mentioned and is well noted that memorial selling period was not great from a weather perspective.

Speaker #10: But I guess the question I want to ask is: was there anything notable geographically? You know, maybe to help us break apart the benefits of normalizing or improving weather through the period versus maybe some true underlying improvements in underlying demand?

But it would impact a certain geographies worse than others other than that as you can imagine we're paying really really close attention to all things macro all things housing all thing governmental policies to determine if we're seeing any material impacts to certain geographies and to date. There is nothing material that I can see.

Speaker #5: So, Brian, I would say that geographically, the only anomalies that we saw were hurricane overlaps, which create some degree of negative comps in certain geographies.

Brandon Sink: Geographically, the only anomalies that we saw were hurricane overlaps, which create some degree of negative comps in certain geographies in addition to weather. Brandon mentioned, and it is well noted, that the Memorial selling period was not great from a weather perspective, but it impacted certain geographies worse than others. Other than that, as you can imagine, we are paying really, really close attention to all things macro, all things housing, all things governmental policies to determine if we are seeing any material impacts to certain geographies. Today, there is nothing material that I can speak to.

Me too.

That's helpful. Marvin and then my second question.

Speaker #5: In addition to weather, you know, Brandon mentioned in his well-noted comments that the Memorial selling period was not great from a weather perspective. However, it impacted certain geographies worse than others.

I guess bigger picture broader just with respect to tariffs or trade and so if I hear you correctly, you are saying that Lowe's is managing the business and you take a portfolio approach of pricing Youre doing which you have to do.

Speaker #5: Other than that, as you can imagine, we're paying really, really close attention to all things macro, all things housing, and all things governmental policies to determine if we're seeing any material impacts to certain geographies.

Is there anything changing competitively I mean, I guess the question I'm trying to ask is the Lowe's is obviously one of the key scaled players within the space, but these price adjustments are taking hold as these tariffs have taken hold do you see do you see an opportunity for Lowe's to be able to take even more market share than it had historically given us given its position as a scale player.

Speaker #5: And to date, there's nothing material that I can speak to.

Speaker #10: That's helpful, Marvin. Then my second question, I guess bigger picture, broader, you know, just with respect to tariffs of trade. So if I hear you correctly, I mean, you're saying that, you know, Lowe's is managing the business, you know, you take a portfolio approach to pricing, you're doing what you have to do.

Brian It's a good question as you can imagine it's something we spend a lot of time talking about I think if you look at this at a really high level. It comes down to the customer segment.

Speaker 9: That's helpful, Marvin. My second question, I guess, bigger picture or broader, just with respect to tariffs of trade. If I hear you correctly, when you are saying that Lowe's is managing the business, you take a portfolio approach to pricing, you are doing what you have to do. Are you noticing anything changing competitively? I guess the question I am trying to ask is, Lowe's is obviously one of the key scaled players within the space. As these price adjustments are taking hold, as these tariffs are taking hold, do you see an opportunity for Lowe's to be able to take even more market share than it had historically, given its position as a scaled player?

That you are serving.

Speaker #10: Are you noticing—is there anything changing competitively? I mean, and I guess the question I'm trying to ask is, you know, Lowe's is obviously one of the key skilled players within the space. But, you know, as these price adjustments are taking hold, these tariffs are taking hold, do you see an opportunity for Lowe's to be able to take even more market share than it had historically, given its position as a skilled player?

And how you can best serve that customer segment in this current environment.

We have done in my estimation, an excellent job of working cross functionally relative to looking for diversification I mean, right now roughly 60% of the goods, we source of coming out of the U S and it wasn't that way seven years ago, and you know in China is it 20% would have a lot higher than that seven years.

Speaker #5: You know, Brian, it's a good question. As you can imagine, it's something we spend a lot of time talking about. I think if you look at this at a really high level, it comes down to the customer segment that you're serving.

Brandon Sink: You know, Brandon, it is a good question. As you can imagine, it is something we spend a lot of time talking about. I think if you look at this at a really high level, it comes down to the customer segment that you are serving and how you can best serve that customer segment in this current environment. We have done in my estimation.

And Bill's team taken methodical you know.

Really really business savvy steps to just keep us from being so overly dependent on one country of origin, having said that as I said earlier.

Speaker #5: And how you can best serve that customer segment in this current environment. We have done, in my estimation, an excellent job of working cross-functionally relative to looking for diversification.

<unk> is an incredibly dynamic.

Marvin Ellison: an excellent job of working cross-functionally relative to looking for diversification. Right now, roughly 60% of the goods we source are coming out of the U.S. It was not that way seven years ago. China is at 20%, but it was a lot higher than that seven years ago. Bill Boltz's team is taking methodical, really, really business-savvy steps to just keep us from being so overly dependent on one country of origin. Having said that, as I said earlier, pricing is incredibly dynamic, and it is driven a lot by a set of business rules that we have internally based on competitive pricing and based on our own internal data on elasticity. We understand what our customers want and what they do not want, and we understand the breakpoint on units when you start to price in a way that you see demand go down.

And it's driven a lot by a set of business rules that we have internally based on competitive pricing and based on our own internal data on elasticity and so we understand what our customers want and what they don't want and we understand the breakpoint on units when you start to.

Speaker #5: I mean, right now, roughly 60% of the goods we source are coming out of the U.S., and it wasn't that way seven years ago.

Speaker #5: And, you know, China's at 20%, but it was a lot higher than that seven years ago. And Bill's team, they're taking methodical, really, really business-savvy steps to just keep us from being so overly dependent on one country of origin.

In a way that you see demand go down and so.

We are managing this literally real time, because this is unchartered waters.

Speaker #5: Having said that, as I said earlier, pricing is incredibly dynamic, and it's driven a lot by a set of business rules that we have internally based on competitive pricing and based on our own internal data on elasticity.

But because we dealt with this before years back when we didn't have great data and systems.

The team is really efficient at managing it now do we have superior system. So.

That's a long winded answer that may not have.

Give you a direct response to the question, but it's a dynamic environment, we're paying close attention to it and we are absolutely trying to take share. We think what we were able to do.

In the second quarter when the weather improves as an example that we are taking share and we're making smart decisions day can give customers a reason to shop us versus the competition.

Marvin Ellison: We are managing this literally real-time because this is uncharted waters. Because we dealt with this before, years back when we did not have great data and systems, the team is really efficient at managing it now that we have superior systems. That is a long-winded answer that may not have given you a direct response to the question, but it is a dynamic environment. We are paying close attention to it, and we are absolutely trying to take share. We think what we were able to do in the second quarter when the weather improved is an example that we are taking share and that we are making the smart decisions that can give customers a reason to shop us versus the competition.

Got it I appreciate all the color. Thank you okay. Thank you.

Thank you.

Our next question is from the line of Jonathan Matuszewski with Jefferies. Please proceed with your questions.

Good morning, and thanks for taking my question. My first one was on SPN wanted to double click on the faster fulfillment that could be.

Realized here and just wanted to see if you could frame maybe the improvement in speed.

That pro customers may potentially enjoy from SPM and Lowe's joining forces with <unk> sure. If there's a way to understand time get served today versus what could happen pro forma for the deal that was my first question.

Speaker 2: Guys, I appreciate all the color. Thank you.

Marvin Ellison: Okay, thank you.

Rob: Thank you. Our next question is from the line of Jonathan Mazuski with Jefferies. Please proceed with your questions.

Yes, so Jonathan it's one of the things we're really excited about.

Kate Pearlman: Good morning, and thanks for taking my questions. My first one was on FBM. I wanted to double-click on the faster fulfillment that could be realized here. I just wanted to see if you could frame maybe the improvement in speed that pro customers may potentially enjoy from FBM and Lowe's joining forces. I was not sure if there is a way to understand time to serve today versus what could happen pro forma for this deal. That was my first question.

As an example, one of <unk> core competency is drywall and they sell a lot of it and they can deliver it to multiple floors. If a customer comes into one of our stores today and we sell just to keep it simple a flatbed of dry wall.

Getting that.

Phil.

Received and delivered as a really really painful process.

And today, we'll just part as you would <unk> through our endless aisle technology, we literally can get that sale sent over to them electronically Bacon pickett fulfill it within 24 hours or less and so it's all about the geography and as I mentioned earlier one of them.

Marvin Ellison: Yeah, so Jonathan, it is one of the things we are really excited about. As an example, one FBM's core competency is drywall, and they sell a lot of it, and they can deliver it to multiple floors. If a customer comes into one of our stores today, and we sell, just to keep it simple, a flatbed of drywall, getting that sale received and delivered is a really, really painful process. Today, with this partnership with FBM, through our endless aisle technology, we literally can get that sale sent over to them electronically. They can pick it, fulfill it within 24 hours or less. It is all about the geography.

The most compelling reasons for this acquisition is wherever geographic footprint is all places, where we don't have a dense population of stores, primarily California, the northeast and these urban areas in the Midwest.

This will be critical for us to not only drive pro sales from the physical low stores in those locations, but to get salespeople on the ground in those locations to drive sales, where we just don't have the density and scale right now, but the efficiency and fulfillment is going to be exponentially better.

Marvin Ellison: As I mentioned earlier, one of the most compelling reasons for this acquisition is wherever geographic footprint is, are places where we do not have a dense population of stores, primarily California, the Northeast, and these urban areas in the Midwest. This will be critical for us to not only drive pro sales from the physical Lowe's stores in those locations, but to get salespeople on the ground in those locations to drive sales where we just do not have the density and scale right now. The efficiency and fulfillment is going to be exponentially better.

Understood and a quick follow up.

<unk> plans to the marketplace earlier this year I think the initiative is still early days, but.

And maybe Brandon if you could dream the dream, how would you frame the working capital and inventory efficiencies that can materialize over time, but the scaled <unk> marketplace.

Yes.

Yes, Jonathan Thanks for the question.

I would say as it relates to our marketplace continue to be very excited about the progress we're making we're seeing expanded breadth of product offering across various price points, we're able to offer <unk>.

Kate Pearlman: Understood. A quick follow-up: You unveiled plans for the marketplace earlier this year. I think the initiative is still early days, but maybe, Brandon Sink, if you could dream the dream, how would you frame the working capital and inventory efficiencies that could materialize over time with a scaled 3P marketplace? Thanks.

You to premium we spoke back in May about the launch of the Miracle platform, we're making really good progress adding vendors.

The platform and very much rolling this out in.

Pace.

Meets our expectations.

I wouldn't say right at this point in time, we have specific expectations around working capital or anything like that but expect over the long term beyond 2025 for this to be a meaningful contributor.

Brandon Sink: Jonathan, thanks for the question. I would say as it relates to our marketplace, we continue to be very excited about the progress we are making. We are seeing expanded breadth of product offering across various price points. We are able to offer value to premium. We spoke back in May about the launch of the Miracle platform. We are making really good progress adding vendors to the platform and very much rolling this out at a pace that meets our expectations. I would not say right at this point in time we have specific expectations around working capital or anything like that, but expect over the long term, beyond 2025, for this to be a meaningful contributor to our online offering and what we are able to do through our Total Home strategy. Rob, with that, we have time for one more question.

Our online offering and what we're able to do through our total home strategy.

And Rob with that we have time for one more question.

Thank you that question final question will come from the line of Steven Zaccone with Citi. Please proceed with your questions.

Great. Good morning, Thanks, very much for taking my question Congrats on the acquisition.

First question was on the margin impact from buying this asset so given the difference in the business model.

Can we expect as a preliminary view of kind of gross margin and EBIT margin rate by adding SDN and then bigger picture. How does this impact some of your longer term financial targets in the past you've talked about reaching an operating margin of 14, 5% with a line of sight to 15 does this signal that margin dollars kind of manner.

Rob: Thank you. That final question will come from the line of Steven Sacone with Citi. Please receive your questions.

More than margin rate in the next couple of years.

William Boltz: Great, good morning. Thanks very much for taking my question. Congrats on the acquisition. My first question was on the margin impact from buying this asset. Given the difference in the business model, what should we expect as a preliminary view of gross margin and EBIT margin rate by adding FBM? Then bigger picture, how does this impact some of your longer-term financial targets? In the past, you have talked about reaching an operating margin of 14.5% with a line of sight to 15%. Does this signal that margin dollars matter more than margin rate in the next couple of years?

Yes, Steve.

Thank you for the question I think as it relates to financial expectations, I'll say first and foremost we expect the <unk> acquisition to help us deliver more sustainable long term sales growth and that's going to come with deeper pro penetration, especially in pro planned spend Marvin talked at length about our ability to access the $250 billion.

Large complex protein that we really don't get much access to today <unk>.

That will translate we believe to increased operating profit, it's going to continue to support <unk>.

<unk> growth over time, we're not going to specifically get into this point dilution or expectations as it relates to 2026, we're going to provide an update.

Brandon Sink: Yes, Steve, thank you for the question. I think as it relates to financial expectations, I will say first and foremost, we expect FBM acquisition to help us deliver more sustainable long-term sales growth. That is going to come with deeper pro penetration, especially in pro plan spend. Marvin Ellison talked at length about our ability to access the $250 billion large complex pro TAM that we really do not get much access to today. That will translate, we believe, to increased operating profit. It is going to continue to support EPS growth over time. We are not going to specifically get into this point, dilution or expectations as it relates to 2026. We are going to provide an update after we close out FBM, and the exact timing will depend on that, but we expect to have more of an update there in November.

Great. Good morning. Thanks very much for taking my question. Congrats on the acquisition. Um, first question was on the margin impact from buying this asset. So, given the difference in the business model, what should we expect as a preliminary view of kind of gross margin and even EBIT margin rate by adding SBM? And then, bigger picture, how does this impact some of your longer-term financial targets? In the past, you've talked about reaching an operating margin of kind of 14.5 percent, with a line of sight to 15. Does this signal that margin dollars kind of matter more than margin rate in the next couple of years?

After we close out F B M and the exact timing will depend on that but we expect to have more of an update there November as it relates to the second part of the question on the on the long term targets right now, we're sticking with and focused on 25 and delivering on those commitments shown our ability to do that manage profitability really well.

And any impacts from SPM on long term targets, we're going to look forward to discussing that closer to the end of the year and as we start to look ahead to 2026.

Yes, Steve, uh, you know, thank you for the question. I think, as it relates to financial expectations, I’ll say first and foremost, we expect FBM acquisition to help us deliver more sustainable, long-term sales growth. And that's going to come with deeper prop penetration, especially in Pro plan's. Marvin talked at length about our ability to access the $250 billion large complex protein market that we really don't get much access to today. Um, that'll translate, we believe, to...

Okay understood and the follow up I had was on the capital allocation side. So we saw that you pause share repurchases through the second quarter of 2007, Marvin you alluded to the potential for more tuck in M&A in the future having done this acquisition.

Brandon Sink: As it relates to the second part of the question on the long-term targets, right now we are sticking with and focused on 2025 and delivering on those commitments, showing our ability to do that and manage profitability really well. Any impacts from FBM on long-term targets, we are going to look forward to discussing that closer to the end of the year and as we start to look ahead to 2026.

Should we expect share repurchases kind of take a back seat for the next couple of years and even when you return, we'd see a lower level of share repurchase activity.

Yes, Steve I'll take that very committed.

As we've continued to reference to our 275 times target and our existing credit rating.

Rob: Okay, understood. The follow-up I had was on the capital allocation side. We saw that you paused the share repurchases through the second quarter of 2027. Marvin Ellison alluded to the potential for more tuck-in M&A in the future now that you have done this acquisition. Should we expect share repurchases to kind of take a backseat for the next couple of years? Even when you return, would we see a lower level of share repurchase activity?

Increased operating profit, it's going to continue to support, uh, EPS growth over time. Uh, we're not going to specifically get into this point, uh, dilution or expectations as it relates to 2026. We're going to provide an update, uh, after we close out, uh, fbm and the exact timing, uh, will depend on that. But we expect to have more of an update there. Uh, November as it relates to, you know, the second part of the question, on on the long term targets, uh, right now we're sticking with and, and focused on 25 and delivering on those commitments, uh, showing our ability to do that and manage profitability really well and and any uh impacts from fbm uh on long-term targets, we're going to look forward to discussing that uh closer to the end of the year. And as we start to look ahead to 2026.

We are going to pay down debt aggressively here over the next couple of years to get back to that leverage target.

At that at over the over the next two years 'twenty five 'twenty six we do expect to temporarily pause our share repurchases and we expect that to resume in 2027 once we get back to that leverage target, but just more broadly as we look at trade offs from this again, our number one priority is to continue to invest.

Okay, understood. And the follow-up I had was on the capital location side. So, you know, we saw that you paused the share purchases to the second quarter of 2027. Uh, Marvin, you alluded to the potential for more tuck-in M&A in the future. Now that you've done this acquisition,

Brandon Sink: Yeah, Steve, I will take that. Very committed, as we have continued to reference, to our 2.75 times target and our existing credit rating. We are going to pay down debt aggressively here over the next couple of years to get back to that leverage target. Over the next two years, 2025, 2026, we do expect to temporarily pause our share repurchases, and we expect that to resume in 2027 once we get back to that leverage target. More broadly, as we look at trade-offs from this, again, our number one priority is to continue to invest in the business. That has been stated through our capital allocation philosophy. We are going to invest in the business for growth.

Should we expect cap share purchases to kind of take a backseat for the next couple of years? And even when you return, we'd see a lower level of share purchase activity.

And the business that's been stated through our capital allocation philosophy, we're going to invest in the business for growth. We believe the <unk> acquisition is going to unlock operating leverage cost synergies cross selling opportunities.

And over time, we expect this will scale and ultimately drive stronger returns in line with our target range.

And Steve This is Kevin.

Yes, the last point and any tuck ins that that we do will be within our capital allocation framework and within our Capex.

Commitment for whatever time periods when to brand as Paul We're excited about this acquisition. We're excited about building out the platform, but we're also committed to paying down debt and getting back to our leverage target.

Brandon Sink: We believe the FBM acquisition is going to unlock operating leverage, cost synergies, cross-selling opportunities, and over time, we expect this will scale and ultimately drive stronger returns in line with our target range.

Understood. Thanks, very much for the detail.

Thank you Steve.

Thank you all for joining US today, we look forward to speaking with you on our third quarter earnings call in November.

Marvin Ellison: Steve, this is Marvin. Last point, any tuck-ins that we do will be within our capital allocation framework and within our CapEx commitment for whatever time period that we are in. To Brandon Sink's point, we are excited about this acquisition. We are excited about building out the platform, but we are also committed to paying down debt and getting back to our leverage target.

Yeah.

This concludes today's conference you may disconnect your lines at this time, we thank you for your participation.

Yes, Steve, I'll take that very committed. Uh, you know, as as we've continued to reference to our 2.75 times Target, uh, and our existing credit rating. Uh, we are going to pay down debt aggressively here over the next couple of years, to get back to that leverage Target, uh, at that, at over the over the next 2 years 2526. Uh we do expect a temporarily pause, uh, our share repurchases and we expect that to resume uh, in 2027 once we get back, uh, to that leverage Target, but just more broadly as we look at, you know, trade-offs from this again, our our number 1 priority, is to continue to invest in the business that's been stated through our Capital allocation philosophy. We're going to invest in the business for growth. Uh, we believe the fbm acquisition is going to unlock operating, leverage cost, synergies cross-selling opportunities. Uh, and over time we expect this will scale and ultimately, you know, Drive stronger returns in line with our target range.

Rob: Understood. Thanks very much for the detail.

And Steve, this is the last point. Any tuck-ins that we do will be within our capital allocation framework and within our capex commitment, for whatever time period that they're in. To Brandon's point, we're excited about this acquisition. We're excited about building out the platform, but we're also committed to paying down debt and getting back to our leverage target.

Brandon Sink: Thank you, Steve.

Joseph McFarland: Thank you all for joining us today. We look forward to speaking with you on our third quarter earnings call in November.

Understood. Thanks very much for the detail.

Thank you, Steve.

Rob: Thank you. This concludes today's conference. We will disconnect your lines at this time. We thank you for your participation. Hey, thanks everyone. We are clear.

Thank you all for joining us today. We look forward to speaking with you on our third quarter earnings call in November.

Thank you. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.

And thanks everyone for clear.