Lowe’s reported higher fourth-quarter sales as continued growth in its business supplying professional builders helped it to offset weakness in the home improvement market. - Getty Images Lowe’s is expecting a flat home-improvement market in 2026 as stalled housing sales, high interest rates and economic uncertainty continue to lead homeowners to delay remodeling and repair projects. “Our outlook for 2026 remains cautious given the persistent volatility in the housing macro,” said Chief Executive Marvin ...

Financial Data and Key Metrics Changes - In Q1 2025, the company delivered 1,040 new homes with an average sales price of $693,000, resulting in home sales revenue of $721 million [8][22] - Homebuilding gross margin was 23.9%, a 90 basis point increase compared to the same period last year [8][23] - Net income for the quarter was $64 million, resulting in diluted earnings per share of $0.70 [9][24] - The company ended the quarter with total liquidity of $1.5 billion, including over $800 million in cash [14][27] Business Line Data and Key Metrics Changes - Net new home orders for the quarter were 1,238, with a monthly absorption rate of 2.8% per average selling community [9][24] - The absorption pace in the West was 3.2%, with stronger demand in the Inland Empire, Las Vegas, and Seattle markets [24] - In the East, the absorption pace was also 3.2%, with strong demand in the DC Metro and Raleigh divisions [24] Market Data and Key Metrics Changes - The spring selling season started slower than usual, with a cancellation rate on gross orders during Q1 remaining low at 10% [9][26] - The company opened 18 new communities and closed out of 16, ending the quarter with 47 active selling communities [26] Company Strategy and Development Direction - The company focuses on a differentiated business strategy that includes innovative designs and a premium brand experience in core locations [11][18] - The company is balancing risk mitigation with opportunity, taking a disciplined approach to capital investment and land underwriting [13][18] - The company anticipates opening 65 communities for the full year of 2025, ending the year with 50 to 60 active communities [27] Management's Comments on Operating Environment and Future Outlook - Management noted that elevated economic uncertainty is weighing on consumer sentiment, but the long-term outlook for housing remains favorable due to a continuing shortage of homes [9][19] - The company is confident in its ability to drive sustainable performance and create long-term value for shareholders, supported by demographic tailwinds and ongoing demand for housing [20][21] Other Important Information - The company repurchased $75 million of its common stock during the quarter, reducing shares outstanding by 1.9% [15][28] - The average annual household income of homebuyers in backlog financing through TRI Pointe Connect was $219,000, with an average FICO score of 750 [12] Q&A Session Summary Question: Absorption rates and targets - Management acknowledged that the spring selling season has been slower than usual, adjusting the absorption target to 2.5% to 3% for the year [41][42] Question: Incentives and gross margin guidance - Management explained that the gross margin guidance reflects a mix of communities and that incentives impact margins, but the mix of higher-margin divisions also plays a role [53][54] Question: New market opportunities - Management confirmed that there are opportunities in new markets, including talent acquisition and land deals, and emphasized a disciplined approach to underwriting [92][96] Question: Inventory levels and market conditions - Management indicated that inventory levels are expected to remain down, depending on absorption rates and market conditions [109] Question: Debt and interest expense - Management noted that interest levels will decrease as the year progresses, with a more significant benefit expected next year as inventory rolls out [112]