Unlevered Free Cash Flow (mm)

Fiscal Year 2020A 2021A 2022A 2023E

$ 110,225 Revenue 132,110 151,157 157,403 177,553
COGS 87,257 100,325 104,625 117,711
Gross Profit 44,853 50,832 52,778 59,841
Operating Expenses
Selling, General, Administrative 24,447 25,406 26,284 30,783
Total Operating Expenses 24,447 25,406 26,284 30,783
EBITDA 20,406 25,426 26,494 29,059
Depreciation & Amortization 2,128 2,386 2,455 2,414
Operating Profit (EBIT) 18,278 23,040 24,039 26,645
Interest and other, net 1,300 1,303 1,562 1,711
Operating Taxes 4,112 5,304 5,372 6,028
NOPAT (Net Operating Profit After Taxes) 12,866 16,433 17,105 18,907
(+) Depreciation & Amortization 2,128 2,386 2,455 2,414
(-) Capital Expenditures 2463 2566 3119 2,821
(-) Change in NWC 1,813 3,876 (4,949) 2,497
NWC 1,435 5,311 362 2,859
Current Assets 19,810 28,477 29,055 30,945
Current Liabilitites 18,375 23,166 28,693 28,086
Unlevered Free Cash Flow 10,718 12,377 21,390 16,002

Assumptions
Fiscal Year 2020A 2021A 2022A 2023E
Revenue Growth 19.85% 14.42% 4.13% 12.80%

COGS % of Revenue 66.05% 66.37% 66.47% 66.30%

SG&A % of Revenue 18.51% 16.81% 16.70% 17.34%
Tax % of EBIT 22.50% 23.02% 22.35% 22.62%
Interest % of EBIT 7.11% 5.66% 6.50% 6.42%
 2024E 2025E 2026E 2027E
200,282 225,922 254,843 287,467
132,780 149,778 168,952 190,580
67,502 76,143 85,891 96,886

34,723 39,168 44,182 49,838

34,723 39,168 44,182 49,838
32,779 36,975 41,709 47,048
2,455 2,498 2,541 2,585
30,324 34,477 39,167 44,463
1,947 2,214 2,515 2,855
6,860 7,799 8,860 10,058
21,517 24,464 27,792 31,549
2,455 2,498 2,541 2,585
2,870 2,920 2,970 3,022
366 413 466 525
3,225 3,638 4,104 4,629
34,906 39,375 44,416 50,101
31,681 35,737 40,312 45,472
20,736 23,629 26,897 30,587

2024E 2025E 2026E 2027E

12.80% 12.80% 12.80% 12.80%

66.30% 66.30% 66.30% 66.30%

17.34% 17.34% 17.34% 17.34%
22.62% 22.62% 22.62% 22.62%
6.42% 6.42% 6.42% 6.42%
Fixed Assets Schedule
Fiscal Year 2020A 2021A 2022A 2023E 2024E
Beginning PP&E 22,375 22,710 22,890 23,554 23,962
D&A 2,128 2,386 2,455 2,414 2,455
CapEx 2,463 2,566 3,119 2,821 2,870
Ending PP&E 22,710 22,890 23,554 23,962 24,376

Assumptions
Fiscal Year 2020A 2021A 2022A 2023E 2024E
D&A as a % of Beginning PP&E 9.51% 10.51% 10.73% 10.25% 10.25%
CapEx as a % of Beginning PP&E 11.01% 11.30% 13.63% 11.98% 11.98%
 2025E 2026E 2027E
24,376 24,798 25,227
2,498 2,541 2,585
2,920 2,970 3,022
24,798 25,227 25,663

2025E 2026E 2027E

10.25% 10.25% 10.25%
11.98% 11.98% 11.98%
Net Working Capital
Fiscal Year 2020A 2021A 2022A
Cash and cash equivalents 2,133 7,895 2,343
Accounts Receivables 2,106 2,992 3,426
Merchandise Inventory 14,531 16,627 22,068
Other Current Assets 1,040 963 1,218
Current Assets 19,810 28,477 29,055

Short-term debt 974 0 1,035

Accounts Payable 7,787 11,606 13,462
Accrued Salaries and Benefits 1,494 2,463 2,426
Sales taxes payable 605 774 848
Deferred revenue 2,116 2,823 3,596
Income taxes payable 55 193 158
Current installments of long-term debt 1,839 1,416 2,447
Current operating lease liabilities 828 828 830
Other accrued expenses 2,677 3,063 3,891
Current Liabilities 18,375 23,166 28,693

Assumptions
Fiscal Year 2020A 2021A 2022A
Revenue 132110 151157 157403
COGS 87257 100325 104625

Days Sales Outstanding (DSO) 5.738854 7.125836 7.835683

Days Inventory Outstanding (DIO) 59.95118 59.66329 75.9329
Days Payable Outstanding (DPO) 32.12716 41.64625 46.32086

Other Current Assets as a % of Revenue 0.79% 0.64% 0.77%

Accrued Salaries as a % of Revenue 1.13% 1.63% 1.54%
Sales taxes payable as % of revenue 0.46% 0.51% 0.54%
Deferred revenue as % of revenue 1.60% 1.87% 2.28%
Income taxes payable as % of revenue 0.04% 0.13% 0.10%
Current installments of long-term debt as % of revenue 1.39% 0.94% 1.55%
Current operating lease liabilities as % of revenue 0.63% 0.55% 0.53%
Other Current Liabilities as a % of Revenue 2.03% 2.03% 2.47%
Short-term debt as % of revenue 0.74% 0.00% 0.66%
cash as % of revenue 1.61% 5.22% 1.49%
 2023E 2024E 2025E 2026E 2027E
4,928 5,559 6,270 7,073 7,978
3,403 3,839 4,330 4,885 5,510
21,313 24,042 27,119 30,591 34,507
1,301 1,467 1,655 1,867 2,106
30,945 34,906 39,375 44,416 50,101

826 931 1,050 1,185 1,337

13,089 14,765 16,655 18,787 21,192
2,546 2,872 3,239 3,654 4,122
893 1,007 1,136 1,282 1,446
3,405 3,841 4,333 4,888 5,513
160 180 203 229 258
2,298 2,593 2,924 3,299 3,721
1,007 1,136 1,282 1,446 1,631
3,862 4,356 4,914 5,543 6,252
28,086 31,681 35,737 40,312 45,472

2023E 2024E 2025E 2026E 2027E

177,553 200,282 225,922 254,843 287,467
117,711 132,780 149,778 168,952 190,580

6.900124 6.900124 6.900124 6.900124 6.900124

65.18246 65.18246 65.18246 65.18246 65.18246
40.03142 40.03142 40.03142 40.03142 40.03142

0.73% 0.73% 0.73% 0.73% 0.73%

1.43% 1.43% 1.43% 1.43% 1.43%
0.50% 0.50% 0.50% 0.50% 0.50%
1.92% 1.92% 1.92% 1.92% 1.92%
0.09% 0.09% 0.09% 0.09% 0.09%
1.29% 1.29% 1.29% 1.29% 1.29%
0.57% 0.57% 0.57% 0.57% 0.57%
2.17% 2.17% 2.17% 2.17% 2.17%
0.46% 0.46% 0.46% 0.46% 0.46%
2.78% 2.78% 2.78% 2.78% 2.78%
Unlevered Free Cash Flow (mm)
Fiscal Year 2020A 2021A 2022A 2023E
Unlevered Free Cash Flow 10,718 12,377 21,390 16,002

Projection Year 1
Present Value of Free Cash Flow 14,659

Implied Share Price Calculation Sensitivity Table

Sum of PV of FCF 88,893
Growth Rate 5.0% Growth R
WACC 9.2% 351.44 4.00%
Terminal Value 497,465 8.16%
PV of Terminal Value 320,890 8.66%

WACC
Enterprise Value 409,783 9.16%
(+) Cash 2,343 9.66%
(-) Debt 51,904 10.16%
(-) Minority Interest 0
Equity Value 360,222
Diluted Shares Outstanding (mm) 1025.00
Implied Share Price 351.44
Actual Share Price 320.47
Share Price Undervalued 9.66%
 2024E 2025E 2026E 2027E
20,736 23,629 26,897 30,587

2 3 4 5
17,400 18,164 18,940 19,730

Sensitivity Table

Growth Rate
4.50% 5.0% 5.50% 6.00%
 Weighted Average Cost of Capital (WACC)
Equity (mm) 322,193
Debt (mm) 51,904

Cost of Debt 4.4%

Tax Rate 24.0%
D/(D+E) 13.9%
After Tax Cost of Debt 3.4%

Risk Free Rate (10-Yr Treasury Yield) 4.25%

Expected Market Return
Market Risk Premium 5.0%
Levered Beta 1.17
E/(D+E) 86.1%
Cost of Equity 10.1%

WACC 9.2%
 THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS

Fiscal Fiscal Fiscal

in millions, except per share data 2020 2021 2022
Net sales $ 132,110 $ 151,157 $ 157,403
Cost of sales 87,257 100,325 104,625
Gross profit 44,853 50,832 52,778
Operating expenses:
Selling, general and administrative 24,447 25,406 26,284
Depreciation and amortization 2,128 2,386 2,455

Total operating expenses 26,575 27,792 28,739

Operating income 18,278 23,040 24,039
Interest and other (income) expense:
Interest income and other, net (47) (44) (55)
Interest expense 1,347 1,347 1,617
Interest and other, net 1,300 1,303 1,562
Earnings before provision for income taxes 16,978 21,737 22,477
Provision for income taxes 4,112 5,304 5,372
Net earnings $ 12,866 $ 16,433 $ 17,105

Basic weighted average common shares 1,074 1,054 1,022

Basic earnings per share $ 11.98 $ 15.59 $ 16.74

Diluted weighted average common shares 1,078 1,058 1,025

Diluted earnings per share $ 11.94 $ 15.53 $ 16.69
THE HOME DEPOT, INC.
CONSOLIDATED BALANCE SHEETS

February 2, January 31,

in millions, except per share data 2020 2021
Assets
Current assets:
Cash and cash equivalents $ 2,133 $ 7,895
Receivables, net 2,106 2,992
Merchandise inventories 14,531 16,627
Other current assets 1,040 963
Total current assets 19,810 28,477
Net property and equipment 22,770 24,705
Operating lease right-of-use assets 5,595 5,962
Goodwill 2,254 7,126
Other assets 807 4,311
Total assets $ 51,236 $ 70,581

Liabilities and Stockholders' Equity

Current liabilities:
Short-term debt $ 974 $ -
Accounts payable 7,787 11,606
Accrued salaries and related expenses 1,494 2,463
Sales taxes payable 605 774
Deferred revenue 2,116 2,823
Income taxes payable 55 193
Current installments of long-term debt 1,839 1,416
Current operating lease liabilities 828 828
Other accrued expenses 2,677 3,063
Total current liabilities 18,375 23,166
Long-term debt, excluding current installments 28,670 35,822
Long-term operating lease liabilities 5,066 5,356
Deferred income taxes 706 1,131
Other long-term liabilities 1,535 1,807
Total liabilities 54,352 67,282
Commitments and contingencies (Note 11)
Common stock, par value $0.05; authorized: 10,000 shares; issued:
1,794 shares at January 29, 2023 and 1,792 shares at January 30,
2022; outstanding: 1,016 shares at January 29, 2023 and 1,035
shares at January 30, 2022 89 89
Paid-in capital 11,001 11,540
Retained earnings 51,729 58,134
Accumulated other comprehensive loss (739) (671)
Treasury stock, at cost, 778 shares at January 29, 2023 and 757
shares at January 30, 2022 (65,196) (65,793)
Total stockholders' equity (deficit) (3,116) 3,299
Total liabilities and stockholders' equity $ 51,236 $ 70,581
January 30,
2022

$ 2,343
3,426
22,068
1,218
29,055
25,199
5,968
7,449
4,205
$ 71,876

$ 1,035
13,462
2,426
848
3,596
158
2,447
830
3,891
28,693
36,604
5,353
909
2,013
73,572

90
12,132
67,580
(704)
 (80,794)
(1,696)
$ 71,876
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Fiscal Fiscal

in millions 2020 2021 2022
Cash Flows from Operating Activities:
Net earnings $ 12,866 $ 16,433 $ 17,105
Reconciliation of net earnings to net cash provided by
operating activities:
Depreciation and amortization 2,519 2,862 2,975
Stock-based compensation expense 310 399 366

Changes in receivables, net (465) (435) 111

Changes in merchandise inventories (1,657) (5,403) (2,830)
Changes in other current assets 43 (330) (311)
Changes in accounts payable and accrued expenses 5,118 2,401 (2,577)
Changes in deferred revenue 702 775 (526)
Changes in income taxes payable (149) (51) (107)
Changes in deferred income taxes (569) (276) 138
Other operating activities 121 196 271
Net cash provided by operating activities 18,839 16,571 14,615

Cash Flows from Investing Activities:

Capital expenditures (2,463) (2,566) (3,119)

Payments for businesses acquired, net (7,780) (421) -

Other investing activities 73 18 (21)

Net cash used in investing activities (10,170) (2,969) (3,140)

Cash Flows from Financing Activities:

(Repayments of) proceeds from short-term debt, net (974) 1,035 (1,035)
Proceeds from long-term debt, net of discounts 7,933 2,979 6,942
Repayments of long-term debt (2,872) (1,532) (2,491)
Repurchases of common stock (791) (14,809) (6,696)
Proceeds from sales of common stock 326 337 264
Cash dividends (6,451) (6,985) (7,789)
Other financing activities (154) (145) (188)
Net cash used in financing activities (2,983) (19,120) (10,993)
Change in cash and cash equivalents 5,686 (5,518) 482
Effect of exchange rate changes on cash and cash
equivalents 76 (34) (68)
Cash and cash equivalents at beginning of year 2,133 7,895 2,343
Cash and cash equivalents at end of year $ 7,895 $ 2,343 $ 2,757
Supplemental Disclosures:
Cash paid for income taxes $ 4,654 $ 5,504 $ 5,435
Cash paid for interest, net of interest capitalized 1,241 1,269 1,449
Non-cash capital expenditures 274 421 351