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Home Depot (The) — q1 2026 earnings reconciliation of non gaap measures (company IR deck)
Home Depot (The) (HD) · 5 slides · Filed Oct 29, 2026
Every slide of this earnings presentation, with the text as published. Open the original deck ↗ · All HD deck slides
Slide 1 — Non-GAAP Measures
The Company’s presentations may include certain non-GAAP financial measures, such as its adjusted operating income, adjusted operating margin, adjusted diluted earnings per share ("Adjusted EPS"), return on invested capital ("ROIC") calculation and adjusted debt/EBITDAR ratio. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. Our calculation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies and other companies may not define these non-GAAP financial measures in the same way, which may limit their usefulness as comparative measures. Adjusted Operating Income / Adjusted Operating Margin / Adjusted Diluted Earnings Per Share When used in conjunction with our GAAP results, we believe these non-GAAP measures provide investors with meaningful supplemental measures of our performance period to period, make it easier for investors to compare our underlying business performance to peers, and align to how management analyzes trends and evaluates performance internally. We define adjusted operating income, adjusted operating margin and adjusted diluted earnings per share as follows: Adjusted Operating Income (Page 2) We define adjusted operating income as operating income for the period presented excluding the impact of amortization expense from acquired intangible assets. We do not adjust for the revenue that is generated in part from the use of our acquired intangible assets. Amortization expense, unlike the related revenue, is not affected by operations in any particular period unless an intangible asset becomes impaired, or the useful life of an intangible asset is revised. Adjusted Operating Margin (Page 2) We define adjusted operating margin as adjusted operating income for the period presented, divided by total net sales. Adjusted Diluted Earnings Per Share (Page 3) We define adjusted diluted earnings per share as net income for the period presented excluding the impact of amortization expense from acquired intangible assets and the related tax impact for the period, divided by total diluted weighted average shares outstanding. Return on Invested Capital We believe that ROIC is meaningful for management, investors and ratings agencies because it measures how effectively we deploy our capital base. ROIC is a profitability measure, not a measure of financial performance under GAAP. We define ROIC as follows: Net Operating Profit After Tax (Page 4) We define net operating profit after tax as operating income for the trailing twelve months less income taxes calculated using the effective tax rate for that period. Average Debt and Equity (Page 4) We define average debt and equity as the average of beginning and ending long-term debt (including current installments of long-term debt) and equity for the trailing twelve months. Return on Invested Capital (Page 4) We define ROIC as net operating profit after tax divided by average debt and equity. Adjusted Debt/EBITDAR We believe that adjusted debt/EBITDAR better enables management, investors and ratings agencies to understand and analyze our level of indebtedness in relation to our capital structure. Adjusted debt/EBITDAR is a liquidity measure, not a measure of financial performance under GAAP. We define adjusted debt/EBITDAR as follows: Adjusted Debt (Page 5) We define adjusted debt as long-term debt (including current installments of long-term debt), plus short-term debt, plus operating lease liabilities. EBITDAR (Page 5) We define EBITDAR as net earnings before interest and other, net, income taxes, depreciation and amortization, and operating rents calculated on a trailing twelve month basis. Adjusted Debt/EBITDAR (Page 5) We define adjusted debt/EBITDAR as adjusted debt divided by EBITDAR. Non-GAAP Measures 1
Slide 2 — Adjusted Operating Income Reconciliation
Three Months Ended USD in millions May 3, 2026 May 4, 2025 % Change Net sales $ 41,765 $ 39,856 4.8 % Operating income (GAAP) 4,981 5,133 (3.0) % Operating margin (1) 11.9 % 12.9 % Acquired intangible asset amortization (2) 171 139 Adjusted operating income (Non-GAAP) $ 5,152 $ 5,272 (2.3) % Adjusted operating margin (Non-GAAP) (3) 12.3 % 13.2 % (1) Operating margin is calculated as operating income divided by total net sales. (2) Amounts include acquired intangible asset amortization of $119 million and $87 million during the three months ended May 3, 2026 and May 4, 2025, respectively, related to SRS Distribution Inc., and its subsidiaries. (3) Adjusted operating margin is calculated as adjusted operating income divided by total net sales. Adjusted Operating Income Reconciliation 2
Slide 3 — Adjusted Diluted EPS Reconciliation
Three Months Ended USD in millions, except per share amounts May 3, 2026 May 4, 2025 % Change Diluted weighted average common shares 996 994 0.2 % Diluted earnings per share (GAAP) $ 3.30 $ 3.45 (4.3) % Impact of acquired intangible asset amortization 0.17 0.14 Income tax impact of non-GAAP adjustment (1) (0.04) (0.03) Adjusted diluted earnings per share (Non-GAAP) $ 3.43 $ 3.56 (3.7) % (1) Calculated as the per share impact of acquired intangible asset amortization multiplied by our effective tax rate for the period. Adjusted Diluted EPS Reconciliation 3
Slide 4 — Return on Invested Capital Calculation
Twelve Months Ended (2) USD in millions May 3, 2026 May 4, 2025 Net earnings $ 14,012 $ 14,639 Interest and other, net 2,301 2,283 Provision for income taxes 4,425 4,658 Operating income $ 20,738 $ 21,580 Income tax adjustment (1) (5,003) (5,151) Net operating profit after tax $ 15,735 $ 16,429 Average debt and equity $ 62,032 $ 52,413 ROIC 25.4 % 31.3 % (1) Income tax adjustment is defined as operating income multiplied by our effective tax rate for the trailing twelve months. (2) The fourth quarter of fiscal 2024 includes 14 weeks. All other quarters include 13 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates. Return on Invested Capital Calculation 4
Slide 5 — Adjusted Debt/EBITDAR Calculation
Period Ended USD in millions May 3, 2026 May 4, 2025 Long-term debt (including current installments of long-term debt) $ 50,006 $ 52,228 Short-term debt 3,503 38 Total debt $ 53,509 $ 52,266 Current operating lease liabilities 1,484 1,311 Long-term operating lease liabilities 8,164 7,714 Adjusted debt $ 63,157 $ 61,291 Twelve Months Ended (2) USD in millions May 3, 2026 May 4, 2025 Net earnings $ 14,012 $ 14,639 Interest and other, net 2,301 2,283 Provision for income taxes 4,425 4,658 Depreciation and amortization (1) 4,147 3,860 Operating rents 1,897 1,729 EBITDAR $ 26,782 $ 27,169 Adjusted debt/EBITDAR 2.4 x 2.3 x (1) Includes depreciation and finance lease amortization included in cost of sales, and excludes debt issuance costs and other debt-related amortization which is included in interest and other, net above. (2) The fourth quarter of fiscal 2024 includes 14 weeks. All other quarters include 13 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates. Adjusted Debt/EBITDAR Calculation 5