Lowe’s Boosts Full-Year Revenue Outlook, to Buy Home-Professional Firm for $8.8 Billion

Lowe’s posted second-quarter sales growth and raised its full-year outlook. - Yuki Iwamura/Bloomberg News

Lowe’s posted second-quarter sales growth, raised its full-year revenue outlook and agreed to buy a building-materials company for $8.8 billion.

The home-improvement company said Wednesday it agreed to buy Foundation Building Materials, a North American distributor of interior building products, from private-equity firms American Securities and Clayton Dubilier & Rice, in a deal set to bolster the retailer’s offerings to its professional customers.

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Santa Ana, Calif.-based Foundation, which distributes drywall, metal framing, ceiling systems, commercial doors and hardware, insulation and other products, generated pro-forma sales of about $6.5 billion last year, and has more than 370 locations across the U.S. and Canada, Lowe’s said.

In the second quarter, Lowe’s “delivered positive comp sales driven by solid performance in both Pro and DIY,” Chief Executive Mavin Ellison said.

The Mooresville, N.C., company on Wednesday reported $2.4 billion net income, or $4.27 a share, up from $2.38 billion, or $4.17 a share, a year earlier.

Adjusted earnings were $4.33 a share. Analysts were expecting $4.24 a share.

Second-quarter revenue rose to $23.96 billion, up from $23.59 billion the year prior. Analysts were expecting revenue of $23.95 billion, according to FactSet.

Same-store sales rose 1.1%, in line with analysts’ expectations.

The housing market has been stubbornly slow as high prices and economic uncertainty continue to turn off buyers. That has cut into Lowe’s sales in recent quarters, with fewer consumers undertaking home-improvement projects before selling or after buying a home.

For the full year, Lowe’s raised its sales forecast to $84.5 billion to $85.5 billion for its current fiscal year, up from its previous guidance of $83.5 billion to $84.5 billion.

On a per-share basis, Lowe’s lowered its full-year earnings guidance to between $12.10 and $12.35 from the prior range of $12.15 to $12.40. It expects adjusted earnings of $12.20 to $12.45 a share.

Analysts expect full-year revenue of $84.38 billion, earnings of $12.22 a share and adjusted earnings of $12.24 a share.

Tariffs pose another obstacle for the company, leading to higher import costs and fueling concerns among consumers about rising prices. Lowe’s previously said it would focus on competing on price in order to avoid losing market share, but it didn’t rule out price increases.

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Rival Home Depot said Tuesday it planned some modest price increases after saying in May it would keep prices steady. It reported lower-than-expected quarterly earnings and said it was seeing consumers delay larger renovations due to economic uncertainty and high interest rates.

Lowe’s relies on spending for do-it-yourself products even more than does Home Depot, which has a larger business targeting pro builders. That led analysts to predict that Lowe’s would suffer more than its larger competitor from diminished consumer sentiment.

A Placer.ai report this week found that same-store foot traffic at Lowe’s fell 3.9% from the second quarter last year, compared with Home Depot’s 2.6% decline.

But Lowe’s said the acquisition of Foundation Building Materials from private-equity firms American Securities and CD&R will expand its presence in the professional market. “With this acquisition, we are advancing our multi-year transformation of the Pro offering,” said Ellison. The transaction is expected to close in the fourth quarter.

Lowe’s, which recently shelled out $1.33 billion for interior-finishes company Artisan Design Group, said it expects the Foundation acquisition to accelerate its “Total Home” strategy through expanded capabilities, faster fulfillment, improved digital tools, a robust trade-credit platform and significant cross-selling opportunities.

Lowe’s said it plans to fund the acquisition through a combination of short- and long-term debt, adding that it plans to maintain its current credit ratings. It has $9 billion in fully committed bridge financing from Bank of America and Goldman Sachs for the deal, which is slated to close by the end of the year, Lowe’s said.

New York-based American Securities, which invests in North American companies with annual revenue generally ranging from $200 million to $2 billion, took Foundation private in 2021 in a deal valued at about $1.37 billion. New York buyout firm CD&R took a minority stake in Foundation early last year.

Write to Nicholas G. Miller at [email protected]

Corrections & Amplifications
Lowe’s lowered its full-year earnings-per-share guidance. An earlier version of this article incorrectly said that Lowe’s raised its full-year earnings-per-share guidance. (Corrected on Aug. 20)

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