Home Depot HD · USD

SEGMENT REPORTING AND NET SALESSegment ReportingThe Company defines its segments based on how internally reported financial information is regularly reviewed by the chief operating decision maker (“CODM”), our President and Chief Executive Officer, to analyze financial performance, make decisions, and allocate resources. Primary Segment. We are engaged in retail operations and sell a wide assortment of home improvement products, building materials, lawn and garden products, décor products, and facilities MRO products both in stores and online. We also provide a number of services, including home improvement installation services, and tool and equipment rental. We currently conduct these operations in the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico, each of which represents an operating segment. For disclosure purposes, we aggregate these three geographic operating segments into one reportable segment (the “Primary segment”) due to the similar nature of their operations and economic characteristics.Other. As discussed in Note 13, in June 2024, we acquired SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor through branches located throughout the U.S. On September 4, 2025, SRS completed the acquisition of GMS, a leading distributor of specialty building products, including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. GMS became an additional vertical within SRS referred to as interior and construction products, and SRS is now organized as four different lines of business: roofing and building products, interior and construction products, landscape, and pool. We have determined that each of these four lines of business represents an operating segment, none of which meets the thresholds prescribed under Accounting Standards Codification Topic 280: “Segment Reporting” to be deemed a reportable segment. Therefore, results from these operating segments are presented in “Other.”Segment Information. For our Primary segment, our CODM uses operating income to allocate resources in the planning and forecasting process and to assess segment performance by monitoring actual results versus prior-period, forecasted results, and the annual plan.

COMMITMENTS AND CONTINGENCIES At February 1, 2026, we had outstanding letters of credit totaling $738 million, primarily related to certain business transactions, including insurance programs, trade contracts, and construction contracts. We are involved in litigation arising in the normal course of business. In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

DEBT AND DERIVATIVE INSTRUMENTSShort-Term DebtAt the beginning of fiscal 2025, we had a commercial paper program that allowed for an aggregate of $7.0 billion in borrowings, and was supported by $7.0 billion of back-up credit facilities. These back-up credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in July 2027, a 364-day $2.0 billion credit facility scheduled to expire in May 2025, and a 364-day $1.5 billion credit facility scheduled to expire in July 2025.In May 2025, we terminated all three back-up credit facility agreements and simultaneously entered into a new five-year $3.5 billion credit facility scheduled to expire in May 2030 and a new 364-day $3.5 billion credit facility scheduled to expire in May 2026.In July 2025, we increased our commercial paper program by $4.0 billion in connection with the anticipated financing of the GMS acquisition (see Note 13). In July 2025, in connection with the increase in the commercial paper program, we also entered into a new three-year $3.0 billion back-up credit facility scheduled to expire in July 2028, and a new 364-day $1.0 billion back-up credit facility scheduled to expire in July 2026, as well as amended and restated our existing 364-day $3.5 billion credit facility to extend the maturity from May 2026 to July 2026. In the aggregate, as of February 1, 2026, our commercial paper program allows for borrowings up to $11.0 billion and is supported by $11.0 billion of back-up credit facilities.During fiscal 2025, all of our short-term borrowings were under our commercial paper program, and the maximum amount outstanding during that period was $5.8 billion. At February 1, 2026, we had $4.5 billion of outstanding borrowings under our commercial paper program with a weighted average interest rate of 3.7% and no outstanding borrowings under back-up credit facilities. At February 2, 2025, we had $316 million of outstanding borrowings under our commercial paper program with a weighted-average interest rate of 4.4% and no outstanding borrowings under back-up credit facilities.Long-Term DebtThe following table presents details of the components of our long-term debt:Carrying Amount (1)in millionsInterestPayablePrincipalAmountFebruary 1,2026February 2,20252.70% Senior notes due April 2025Semi-annually$— $— $500 5.125% Senior notes due April 2025Semi-annually— — 500 3.35% Senior notes due September 2025Semi-annually— — 999 4.

INCOME TAXESProvision for Income Taxes and Income Taxes PaidThe following table presents our earnings before the provision for income taxes:in millionsFiscalFiscalFiscal202520242023United States$17,431 $18,119 $18,681 Foreign1,171 1,287 1,243 Total$18,602 $19,406 $19,924 The following table presents our provision for income taxes:in millionsFiscalFiscalFiscal202520242023Current:Federal$2,812 $3,417 $3,764 State725 836 882 Foreign414 386 365 Total current3,951 4,639 5,011 Deferred:Federal503 (67)(228)State46 25 12 Foreign(54)3 (14)Total deferred495 (39)(230)Provision for income taxes:Federal3,315 3,350 3,536 State771 861 894 Foreign360 389 351 Total$4,446 $4,600 $4,781 The following table presents the reconciliation of our provision for income taxes at the federal statutory rate of 21% to the actual tax expense as well as our effective tax rate:FiscalFiscalFiscalin millions202520242023AmountPercentAmountPercentAmountPercentU.S. federal statutory income tax rate$3,906 21.0 %$4,075 21.0 %$4,184 21.0 %State and local income taxes, net of federal income tax effect (1)663 3.6 701 3.6 698 3.5 Foreign tax effects190 1.0 164 0.8 133 0.7 Tax credits(142)(0.8)(150)(0.8)(142)(0.7)Other adjustments (2)(171)(0.9)(190)(1.0)(92)(0.5)Total$4,446 23.9 %$4,600 23.7 %$4,781 24.0 %—————Note: Certain percentages may not sum to totals due to rounding. (1) State taxes in California, Illinois, Massachusetts, New Jersey and New York made up the majority (greater than 50 percent) of the tax effect in this category.(2) Includes immaterial activities in nontaxable or nondeductible items, cross-border tax laws, and changes in unrecognized tax benefits. The Company had no activity in changes in federal tax laws or rates enacted in the current period or changes in federal valuation allowances.The following table presents income taxes paid:in millionsFiscalFiscalFiscal202520242023Federal$3,590 $2,475 $3,737 Domestic state and local:California *186 *Other799 606 854 Domestic state and local subtotal799 792 854 Foreign459 386 432 Total income taxes paid$4,848 $3,653 $5,023 —————* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax provisions, including the allowance to expense 100% of the cost of qualified property and immediate expensing of domestic research and experimental expenditures.

STOCK-BASED COMPENSATIONOmnibus Stock Incentive Plan The Home Depot, Inc. Omnibus Stock Incentive Plan, as Amended and Restated May 19, 2022 (the “Omnibus Plan”) provides that incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units, deferred shares, stock appreciation rights, and other stock-based awards may be issued to certain of our associates and non-employee directors. Under the Omnibus Plan, the maximum number of shares of our common stock authorized for issuance is 80 million shares plus a number of shares (not to exceed 10 million) related to underlying awards outstanding as of May 19, 2022, which can be returned to the share pool if those awards are subsequently terminated or expire unexercised, or are cancelled, forfeited or lapse for any reason, with any award other than a stock option or stock appreciation right reducing the number of shares available for issuance by 2.11 shares. At February 1, 2026, there were approximately 67 million shares available for future grants under the Omnibus Plan.The following table presents total stock-based compensation expense, net of estimated forfeitures, including expense related to our ESPPs, and related income tax benefit:in millionsFiscalFiscalFiscal202520242023Pre-tax stock-based compensation expense$524 $444 $382 Income tax benefit(108)(92)(79)After-tax stock-based compensation expense$416 $352 $303 At February 1, 2026, there was $755 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of approximately three years.The award types issued under the Omnibus Plan are as follows:Stock Options. Under the terms of the Omnibus Plan, incentive stock options and nonqualified stock options must have an exercise price at or above the fair market value of our stock on the date of the grant. Typically, nonqualified stock options vest at the rate of 25% per year commencing on the second anniversary date of the grant and expire on the tenth anniversary date of the grant. These awards become non-forfeitable upon the associate reaching age 60, provided the associate has had at least five years of continuous service. There are no incentive stock options outstanding under the Omnibus Plan.We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model.

PROPERTY AND LEASESNet Property and EquipmentThe following table presents components of net property and equipment:in millionsFebruary 1,2026February 2,2025Land$9,499 $9,060 Buildings and improvements21,321 20,260 Furniture, fixtures, and equipment20,289 18,474 Leasehold improvements2,571 2,423 Construction in progress1,654 1,521 Finance leases4,133 4,045 Property and equipment, at cost59,467 55,783 Less: accumulated depreciation and finance lease amortization31,446 29,081 Net property and equipment$28,021 $26,702 The following table presents depreciation and finance lease amortization expense, including depreciation and finance lease amortization expense included in cost of sales:in millionsFiscalFiscalFiscal202520242023Depreciation and finance lease amortization expense$3,452 $3,283 $3,020 LeasesThe following table presents certain consolidated balance sheet information related to operating and finance leases:in millionsConsolidated Balance Sheet ClassificationFebruary 1,2026February 2,2025Assets:Operating lease assetsOperating lease right-of-use assets$9,204 $8,592 Finance lease assets (1)Net property and equipment2,563 2,638 Total lease assets$11,767 $11,230 Liabilities:Current: Operating lease liabilitiesCurrent operating lease liabilities$1,418 $1,274 Finance lease liabilitiesCurrent installments of long-term debt288 272 Long-term: Operating lease liabilitiesLong-term operating lease liabilities8,160 7,633 Finance lease liabilitiesLong-term debt, excluding current installments2,675 2,749 Total lease liabilities$12,541 $11,928 —————(1) Finance lease assets are recorded net of accumulated amortization of $1.6 billion as of February 1, 2026 and $1.4 billion as of February 2, 2025.The following table presents components of lease cost, excluding short-term lease cost and sublease income, which are immaterial:Consolidated Statement of Earnings Classification (1)FiscalFiscalFiscalin millions202520242023Operating lease costSelling, general and administrative$1,846 $1,661 $1,359 Finance lease cost:Amortization of leased assetsDepreciation and amortization322 328 304 Interest on lease liabilitiesInterest expense113 118 126 Variable lease costSelling, general and administrative585 566 486 —————(1)Costs associated with our sourcing and distribution network are recorded in cost of sales, with the exception of interest on finance lease liabilities.

ACQUISITIONSGMS AcquisitionOn June 29, 2025, we entered into a definitive agreement to acquire GMS, a leading distributor of specialty building products including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. Under the terms of the merger agreement, we, through a wholly owned subsidiary, made a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share. All conditions of the offer were satisfied, including receipt of the requisite regulatory approvals, and the merger was completed on September 4, 2025. As a result of the merger, GMS became a direct subsidiary of SRS and an indirect, wholly owned subsidiary of the Company. We believe the GMS acquisition will enhance SRS's position as a leading multi-category building materials distributor, bringing differentiated capabilities, product categories and customer relationships that are highly complementary to SRS's existing business.Cash consideration remitted by the Company for the purchase of all outstanding shares of GMS common stock totaled approximately $4.3 billion, and we also repaid approximately $1.2 billion of certain GMS outstanding debt concurrent with the completion of the merger. The merger consideration and repayment of GMS debt was funded through a combination of cash on hand and approximately $2.0 billion of borrowings under our commercial paper program, which were refinanced with the issuance of $2.0 billion of long-term debt in September 2025 (see Note 5).The acquisition was accounted for in accordance with Accounting Standards Codification Topic 805: “Business Combinations” and GMS’s results of operations have been consolidated in the Company’s financial statements effective September 4, 2025. Acquisition-related costs were expensed as incurred and were not material.Fair Value of Consideration Transferred. The following table summarizes total purchase consideration: in millions Cash consideration for outstanding shares$4,257 Repayment of GMS outstanding debt (1)824 Total purchase consideration$5,081 —————(1) Represents the repayment of certain GMS long-term debt which was required to be repaid upon a change in control. As further discussed below, an additional $354 million of GMS long-term debt was also repaid upon completion of the merger and has been reflected as an assumed liability upon consummation of the transaction.Allocation of Consideration Transferred.

Our efforts to create a secure digital environment start with the governance and oversight of our data security and privacy policies and strategy. At the Board level, cybersecurity is overseen by the Board and the Audit Committee, which has primary responsibility for overseeing data protection, cybersecurity and privacy matters. In fiscal 2025, our Board held a session dedicated to cybersecurity and business continuity. In addition, since the beginning of fiscal 2025, the Board and/or the Audit Committee have received reports on data protection, cybersecurity and/or privacy matters from senior information technology (“IT”) leaders, including our Chief Information Officer (“CIO”), CISO, Chief Privacy Officer, and the Chair of our Data Security and Privacy Governance Committee (discussed below). Periodically, our Board receives presentations on these matters from third-party experts. Our CISO, who reports to our CIO, joined the Company in 2021 after working with the Company as a third-party consultant beginning in 2019. During a nearly two-decade tenure at a leading professional services firm, he worked with clients on managing information security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs and initiatives addressing emerging cybersecurity threats. Our CISO has significant prior cybersecurity experience, including experience protecting company, customer and associate data across a diverse set of industries. He holds a Bachelor of Science degree in Information Systems and has achieved several relevant certifications, including Certified Information Security Manager, Certified Information Systems Security Professional, and Certified Information Privacy Professional. Our CISO leads a team of associates focused on cybersecurity. We have three management-level committees that support our cybersecurity, privacy and data governance efforts. They are led by our Data Security and Privacy Governance Committee, which provides management-level governance over cybersecurity and privacy matters, including discussion of cybersecurity and privacy priorities, emerging risks, awareness and training programs, risk mitigation efforts, and regulatory compliance. This committee is chaired by our Vice President – Internal Audit and Corporate Compliance and is composed of a cross-functional team of senior leaders, including our CEO.