Home Depot announced its financial performance for the second quarter of 2025, with a 4.9% year-on-year increase in sales and a 1% increase in same-store sales. The performance in the Canadian and Mexican markets was positive. The company emphasized investments in customer experience, including technological upgrades and the construction of a professional ecosystem, as strategic measures. It specifically mentioned the better-than-expected performance after the acquisition of Srs, as well as the upcoming completion of the GMS acquisition, which will enhance Srs's presence in the construction products field and expand market coverage. In the face of market uncertainty, the company stated that it will ensure product supply stability through supply chain optimization and supplier cooperation. Overall, Home Depot is optimistic about future development and is committed to increasing market share.

Through investing in multiple operational plans, including optimizing logistics processes, developing proprietary rate applications, and ensuring adequate inventory, customer service efficiency and productivity have been significantly improved. Technological improvements have enabled stores and distribution centers to work together, enabling quick delivery of online orders and reducing delivery times. Additionally, by adding order fulfillment personnel and optimizing technical tools, the speed and accuracy of online order processing have been improved. Trade credit and order management systems have further enhanced the service experience for professional customers and increased cross-channel sales. These measures together have significantly boosted the company's performance.

Thank you to our employees and supplier partners for their commitment to customer service. In the second quarter, 12 product departments achieved positive year-on-year growth, with average shopping cart amounts increasing due to a higher proportion of high-priced items and inflation in core product categories. Online sales grew by 12% thanks to faster delivery speeds and improved service features. The company's innovation in products such as battery-powered tools and storage systems, along with an optimized shopping experience, particularly in Halloween products, attracted more customers and drove sales growth.

In the second quarter, the total sales of the company increased by 1% year-on-year, with the U.S. market performing strongly, growing by 1.4% year-on-year. The Canadian and Mexican markets also showed positive growth. Despite foreign exchange fluctuations negatively impacting total sales by about 40 basis points, overall performance remained stable. The gross profit margin rose slightly to 33.4%, while operating expenses as a percentage of sales increased by 65 basis points to 18.9%. Pre-tax intangible asset amortization was $139 million, resulting in an adjusted operating profit margin of 14.8%. Interest and other expenses increased to $550 million, with the effective tax rate decreasing to 24.2%. Earnings per share were $4.58, with adjusted earnings per share at $4.68, both slightly higher than the same period last year.

The company reaffirms its sales growth target for the 2025 fiscal year, expecting total sales to increase by 2.8% and same-store sales to grow by 1%. The gross profit margin will remain stable, and operational efficiency will improve. Capital expenditures are planned to be 2.5% of sales, continuing to invest in business development. Post-tax profits and earnings per share are forecasted to slightly decrease, but will remain stable after adjustments. The company emphasizes that it will achieve market share growth through enhancing customer experience and market competitiveness.

Discussed reasons for the improvement in second quarter performance, including weather factors and widespread consumer participation, as well as optimistic expectations for growth in the second half of the year, especially in the U.S. market. Mentioned the impact of exchange rate fluctuations and potential positive effects of future interest rates and tax reform policies.

Discussed the potential stimulative effect of interest rate cuts on the real estate market, as well as the positive impact of tax incentives on consumer spending. Economic uncertainty was identified as the primary reason for delaying large projects, while recent adjustments in tax policies have resulted in additional cash tax benefits, which are expected to increase consumers' disposable income.

Discussed the impact of the clarity of tax policies and changes in interest rates on the recovery of private activities, as well as views on the form of recovery in the current market environment.

Discussed the expectations for the real estate market in the next year, including the possible decrease in long-term interest rates and the impact of tax cuts on the market. Mentioned Aur's pricing performance in this quarter, reduced promotional activities, and forecasted potential adjustments in the market in the second half of the year, emphasizing the importance of pricing strategy in transactions.

The conversation discussed the challenges faced by the home improvement industry due to increased tariffs, emphasizing the high proportion of domestic procurement to reduce the impact and adopting a strategy to protect the overall project cost. It was mentioned that the sales declined in the second quarter due to promotional activities for small-scale gardening projects, and the company is responding to the tariff pressure by reducing promotional efforts in certain areas, with the goal of maintaining a price leadership position in the home improvement sector.

Discussed the company's performance expectations for the second half of the year, pointing out that significant performance improvement is not necessary to achieve the target. Analyzed the impact of foreign exchange pressures, increased high ticket price transactions, and reduced outdoor gardening promotions on transaction volume. At the same time, it is expected that the negative impact of hurricanes on performance will gradually weaken, emphasizing the ongoing growth momentum of departments and geographic regions.

Discussed the possibility that GMS may focus more on commodity attributes compared to the largest vertical sector - the roofing business, while the roofing business relies on a professional sales network. GMS may achieve growth in multiple markets through expanding distribution services, while vertical sectors such as roofing business acquire hard-to-build assets through acquisitions, such as sales teams. Srs has gained market share in the roofing, pool, and landscape sectors through professional trade distribution.

The discussion explored opportunities to enhance profits and market share through the integration of organic professional ecosystems, with a focus on consumers who shop across stores, as well as credit sales and distribution through external sales teams and professional services. Special emphasis was placed on the vertical market potential within specialized areas such as roofs, landscaping, drywall, and ceilings, which complement the existing business model. Mention was made of GMS as a premium asset in these areas, with ongoing communication between the GMS and Srs teams aimed at achieving seamless integration through similar corporate cultures and market strategies. Additionally, by adding 400 distribution points to the existing 800, a comprehensive ecosystem including 1200 distribution points and 2000 stores will be formed to achieve unified market capabilities.

Discussed the phenomenon of the resurgence of the home decoration market demand, emphasized the positive factors such as the health status of consumers, income growth, and property appreciation, while also pointing out the impact of high interest rates on large-scale renovation projects. It indicates the company's expectation of the market continuing to improve, but does not assume that the housing market will experience a reversal.

Discussed in professional projects or complex projects, the cross-benefits of collaborative sales and Srs have been observed to show continuous growth trends. Mentioned the performance in areas such as paint, roofing, landscaping, drywall, etc. in the Q2 report disclosed by public companies. Emphasized the cross-collaboration in distribution and sales, as well as progress in organic growth and cross-sales with Srs. It is pointed out that there is ongoing investment in the professional user ecosystem, including optimizing product portfolios, account management, sales team service models, fulfillment, especially the improvement of distribution reliability and customer satisfaction, and utilizing existing distribution resources to accelerate double-digit sales growth through timely package delivery. In addition, it mentioned the combination of progress in professional trade credit, order management, and distribution, achieving a strong improvement from purchasing to invoicing after delivery of goods.

The conversation discussed the latest performance of the professional sales plan in terms of incremental sales, emphasizing the importance of a mature sales team and internal sales support, as well as significant improvements in on-time and complete delivery. It mentioned weekly evaluations of incremental sales progress, but did not provide specific updated data, only mentioning the milestone of reaching one billion in incremental sales. Discussions were held on the direction of growth trends, but specific details on market expansion were not provided.

By integrating over 200 market distribution operation points, utilizing AI and machine learning technology to optimize delivery routes, achieving faster, more economical, and more punctual delivery services, boosting the confidence of sales teams and customer satisfaction. At the same time, introducing trade credit to serve large professional customers, building an efficient distribution ecosystem, showcasing the role and strength of professional wholesalers.

Discussed Home Depot's recent strategic initiatives, including building a professional ecosystem, developing e-commerce, and capital allocation decisions, emphasizing the importance of meeting customer needs, streamlining supply chain processes, and pursuing economies of scale. At the same time, it was pointed out that striking a balance between growth and returns is crucial for capital allocation, and Home Depot is committed to driving sales and earnings per share growth through market share gains to maximize shareholder value.

The importance of increasing Total Addressable Market (TAM) through acquisitions and collaborations was discussed, emphasizing the role of market leaders in driving market share and revenue growth through strategic investments to achieve returns higher than the cost of capital. Examples were provided to illustrate the efficient capital returns of light asset investments such as SRF branches and GFCs, contrasting them with the stable investment value of Home Depot stores, demonstrating the changing trends in investment returns at different stages and highlighting strategies for optimizing investment portfolios and capital efficiency.

Discussed the strategies of major home retail giants adjusting promotions in response to increased tariffs, especially reducing promotions in the outdoor gardening sector to optimize transaction performance. The company emphasized its continued everyday low price policy, as well as its commitment to working with suppliers to provide customer value. It is expected that the profit and loss statements for the next few quarters will reflect these strategy adjustments. The company is satisfied with its current pricing position and plans to attract customers in the second half of the year through holiday promotions and gift centers.

The conversation discussed the significant performance improvement of the home improvement industry in 12 key sectors, covering non-seasonal projects such as portable power sources, cleaning products, and building materials, showing a broad market recovery. In addition, an analysis was conducted on maintaining the current gross profit margin of 33.4%, indicating that the gross profit margin will remain stable in the short term, only affected by seasonal fluctuations, and the long-term trend will be evaluated at the end of the year.

The dialogue is a summary of the meeting, thanking the participants and announcing the release date of the financial report for the next quarter. The meeting ended successfully.